
Book L_S3 

Copyright }!" 



CQBfRIGHT DEPOSm 



PREPARED UNDER THE DIRECTION OF 

FREDERICK A. CLEVELAND, PH. D. 



TEACHERS' PENSION SYSTEMS IN THE 

UNITED STATES: A CRITICAL AND 

DESCRIPTIVE STUDY 



Publications of 
The Institute for Government Research 



STUDIES IN ADMINISTRATION 

The System of Financial Administration of Great 
Britain 

By W. F. Willoughby, W. W. Willoughby and 
S. M. Lindsay 

The Budget 

By Rene Stourm 

(T. Plazinski, Translator; W. F. McCaleb, Editor) 

The Canadian Budgetary System 
By H. G. Villard and W. W. Willoughby 

The Problem of a National Budget 

By W. F. Willoughby 

The Movement for Budgetary Reform in the States 

By W. F. Willoughby 

Teachers' Pension Systems in the United States 
By Paul Studensky 

Organized Efforts for the Improvement of Methods of 
Administration in the United States 
By G. A. Weber 



PRINCIPLES OF ADMINISTRATION 

Principles Governing the Retirement of Public Em- 
ployees 

By Lewis Meriam 



Principles of Government Purchasing 

By A. G. Thomas 



SERVICE MONOGRAPHS OF THE UNITED 
STATES GOVERNMENT 

The U. S. Geological Survey 
The Reclamation Service 

D. APPLETON & COMPANY 

PUBLISHERS NEW YORK 



THE INSTITUTE FOR GOVERNMENT RESEARCH 
STUDIES IN ADMINISTRATION 



TEACHERS' 

PENSION SYSTEMS IN THE 

UNITED STATES 

A Critical and Descriptive Study 



BY 



PAUL STUDENSKY 




D. APPLETON AND COMPANY 

NEW YORK LONDON 

1920 



L223 3f 



COPYRIGHT, 1920, BY 

THE INSTITUTE FOR GOVERNMENT RESEARCH 



.b -7 1920 



Printed in the United States of America 



A 5 5 9 (3 9 6 



The Institute for Government Research 



Washington, D. C. 



The Institute for Government Research is an association of 
citizens for cooperating with the public officials in the scientific 
study of administrative methods with a view to promoting effi- 
ciency in government and advancing the science of administra- 
tion. It aims to bring into existence such information and 
materials as will aid in the formation of public opinion, and 
will assist officials, particularly those of the national govern- 
ment, in their efforts to put the public administration upon a 
more efficient basis. 

To this end, it seeks by the thoroughgoing study and 
examination of the best administrative practice, public and 
private, American and foreign, to formulate those principles 
which lie at the basis of all sound administration, and to 
determine their proper adaptation to the specific needs of our 
public administration. 

The accomplishment of specific reforms the Institute recog- 
nizes to be the task of those who are charged with the 
responsibility of legislation and administration ; but it seeks 
to assist, by scientific study and research, in laying a solid 
foundation of information and experience upon which such 
reforms may be successfully built. 

While some of the Institute's studies find application only 
in the form of practical cooperation with the administrative 
officers directly concerned, many are of interest to other 
administrators and of general educational value. The results 
of such studies, the Institute purposes to publish in such 
form as will insure for them the widest possible utilization. 



Robert S. Brookings 

Chairman 

Frank J. Goodnow 

Vice-Chairman 



Edwin A. Alderman 
Robert S. Brookings 
James F. Curtis, 
R. Fulton Cutting 
Raymond B. Fosdick 
Felix Frankfurter 
Frank J. Goodnow 
Jerome D. Greene 
Arthur T. Hadley 



OFFICERS 



TRUSTEES 



James F. Curtis 

Secretary 

Frederick Strauss 

Treasurer 



Cesar Lombardx 
A. Lawrence Lowell 
Samuel Mather 
Charles D. Norton 
Martin A. Ryerson 
Frederick Strauss 
Theodore N. Vail 
Robert S. Woodward 



DIRECTOR 
W. F. Willoughby 

EDITOR 

Lewis Mayers 



ACKNOWLEDGMENT 

The author is indebted to Dr. F. A. Cleveland and Dr. W. ¥. 
Willoughby for their invaluable direction in the preparation of 
this book, to Professor Howard L. McBain, Dr. I. M. Rubinow 
and Mr. Lewis Meriam for reading the manuscript and making 
helpful suggestions, and to the editors of the Bureau of 
Municipal Research and of the Institute for Government 
Research, Dr. W. F. McCaleb and Dr. Lewis Mayers. 

Paul Studensky. 



CONTENTS 

PART I. THE PROBLEM OF TEACHERS' PENSIONS 

Chapter Page 

I. The Evolution of Teachers' Pensions in the United 

States 4 

Mutual Aid Associations 4 

The Beginnings of Unsound Legislation, 1894-1896 i5 

Development of Governmental Contributions 23 

Unsoundness of Funds Demonstrated 26 

Present Extent of Teachers' Pension Systems 29 

Growth of State-Wide Systems 30 

Conclusion: Present Tendencies and Forces 34 

IL The Teachers' Pension Problem Outlined 

Groups of Persons to be Included 2>7 

Extension of Systems to Contingencies other than Super- 
annuation 40 

Conditions under which Benefits Should be Granted... 41 

Amount of Benefits 47 

Division of Cost between Employer and Employees 48 

Contributions of Individual Members Si 

Compulsory Participation 54 

Right to Management 55 

Securing Enactment of the System 56 

in. Superannuation Benefits 

Eligibility for Superannuation Benefits 57 

Compulsory Retirement 63 

Amount of Superannuation Benefit 63 

Provisions for Minimum and Maximum Pensions 72 

IV. Disability Benefits 

Conditions under which Disability Benefits are Provided. 79 

Amount of Disability Benefits 80 

Medical Examinations and Reexaminations 82 

V. Death and Withdrawal Benefits 

Death Benefits 86 

Benefits at Resignation or Dismissal 90 

Withdrawal and Loan Privileges 92 

VI. Determining the Cost of Benefits 

Growth of Pension Payments 95 

Cost as Related to Method of Financing System 100 

Actuarial Determination of Cost lOi 

The Problem of Accrued Liabilities 104 

Inadequacy of Contributions in Existing Systems 107 

Estimating the Liabilities of a Going System 113 

Cost and Liabilities Involved under Different Benefits... 115 

xi 



CONTENTS 

Chapter Page 

VII. The Division of Cost Between Government and Teachers 

The Wholly Contributory System ii8 

The Non-Contributory System I19 

The Joint or Partly Contributory System 120 

The Division of Cost between Teachers and Govern- 
ment in Existing Systems 122 

VIII. The Government's Contribution 

Various Elements Determining Amount of the Govern- 
ment's Contribution 125 

Coordinating the Various Elements of the Contribution. 135 

Unsound Methods of Financing the Government's Con- 
tribution: The Cash Disbursement Method 135 

Unsound Methods of Financing the Government's Con- 
tribution: Using Special Revenues not Determined by 
Pension Needs 137 

Unsound Methods of Financing the Government's Con- 
tribution: Fixing Rates not Related to Pension Needs. 140 

Unsound Methods of Financing the Government's Con- 
tribution: Amount of Contribution Discretionary 142 

IX. The Teacher's Contribution 

Contribution not on a Cost Basis : Uniform for all Mem- 
bers, Irrespective of Age, Salary, Sex and Service 145 

Contribution not on a Cost Basis : Graduated According 
to Salary 145 

Contribution not on a Cost Basis : Graduated According to 
Length of Service 146 

Contribution not on a Cost Basis : Graduated According 
to Salary and Length of Service 146 

Contribution of a Uniform Percentage of Salary for all 
Members, with Benefits Adjusted on a Cost Basis 148 

Rate of Contribution Graduated According to Age and 
Salary : Benefits on a Cost Basis 150 

Distributing the Contribution over the Period of Service. 151 

Minimum Contribution as a Prerequisite to Full Benefit. 152 

X. Compulsory Participation and the Right to Management 
Compulsion for New Appointees: Option for Teachers 

Already in the Service 15? 

Compulsion for Present Teachers 156 

The Selection of the Managers of the System 157 



PART IL TYPICAL TEACHERS' PENSION SYSTEMS 
OF TO-DAY 

XI. Systems without Reserves 

Pittsburgh Teachers' Retirement Association 166 

New Jersey 35-Year Service Pension System 169 

Maine School Pension Fund 173 

XII. Systems with Inadequate Reserves : State Systems 

Illinois Teachers' Pension and Retirement Fund 176 

New York State Teachers' Retirement Fund 179 

xii 



CONTENTS 



^TTAPTER "1 

New Jersey Teachers' Retirement Fund •••••••• ^^^ 

Minnesota Teachers' Insurance and Retirement Fund... IQO 

Wisconsin Teachers' Insurance and Retirement Fund... I93 

California Teachers' Retirement Salary Fund I95 

Virginia Retired Teachers' Fund I98 

Michigan Teachers' Retirement Fund 200 

XIII. Systems with Inadequate Reserves: Local Systems 

Philadelphia Teachers' Retirement Fund 203 

Cleveland Teachers' Pension Fund 207 

Boston Teachers' Retirement Fund 209 

Boston Teachers' Permanent Fund 212 

Baltimore Teachers' Retirement Fund 214 

Buffalo Teachers' Retirement Fund 21O 

New Orleans Teachers' Retirement Fund 2i« 

Denver Teachers' Retirement Fund 219 

XIV. Systems with Inadequate Reserves : The Chicago Fund 

The Fund Wholly Contributory : 189S-1907 220 

City Contribution and Compulsion for New Entrants 

Since 1907 .••••. ^^5 

First Step towards Actuarial Reorganization in 1917 231 

XV. The Massachusetts Fund, the First Scientific System ; 
The Connecticut Fund 

History of the System 234 

Provisions of the System ^i*^ 

Connecticut Teachers' Retirement Fund 239 

XVI. The New York City Fund 

History of the Old Fund 243 

The Bill of 1916 • • 240 

The Enactment of the Reorganization Law of 1917 255 

Provisions of the New System 259 

XVII. The Pennsylvania System 

Benefits 269 

Teachers' Contributions 271 

State Contribution 271 

Reimbursement 272 

Valuation ^_^ 

Management ^73 

Relation to Local Funds 273 

XVIII. The Scientific Pension Laws of 1919: New Jersey, Ohio 

and Vermont 

New Jersey ^74 

Ohio 282 

Vermont 287 

Appendix 

I. Comparative Analysis of Teachers' Pension Systems 295 

2 References to Laws, Statistical Reports, etc., Relative to 

all the Teachers' Pension Systems in the United States 307 

3. Laws Providing for Sound Teachers' Pension Systems 34^ 

(a) Massachusetts 34^ 

(b) City of New York 35d 

xiii 



CONTENTS 

(c) Pennsylvania 374 

(d) Connecticut 386 

(e) New Jersey 392 

(f) Ohio 410 

(g) Vermont 425 

4. Actuarial Tables 431 

5. Bibliography 441 



XIV 



EDITORIAL INTRODUCTION 

This volume constitutes one of a series of studies in the field 
of public administration made possible by a generous appro- 
priation for this purpose by the Rockefeller Foundation. With 
the approval of the committee to which the disposition of this 
fund was given and under the editorial direction of Dr. F. A. 
Cleveland, this study was begun, but was later transferred to 
the Institute for Government Research under whose direction 
it was completed and by which it is now published. 

The Institute, early in 191 8, issued a volume by Lewis 
Meriam, a member of its staff, dealing comprehensively with 
the Principles Governing the Retirement of Public Employees. 
That volume, as its title indicates, dealt with all classes of gov- 
ernment employees and was a critical and constructive, rather 
than a descriptive study. The present volume deals with only 
one class of public employees and is both critical and descrip- 
ive. It aims to give the provisions that have been, or should 
be, made with regard to the retirement of a group of public 
employees which, by its size and special character, makes of 
this problem one requiring independent consideration. 

The importance of this problem of efficient public adminis- 
tration has for years been recognized, and for the solution of 
it a wide variety of devices have been employed, but only in 
a few instances have these schemes operated satisfactorily. 
The extent of the reorganization that must be effected, and its 
great significance can be appreciated when the fact is noted, 
that of the nearly one hundred teachers' retirement systems 
now in operation in the United States, only a few can escape 
total collapse unless fundamentally altered. Some of these 
systems include ten, fifteen, or even twenty thousand teachers 
each. Twenty-two of them are state-wide in their operation. 
They apply to over three hundred thousand public school 
teachers, i. e., to nearly one-half of the total number of teachers 
in the United States and they have liabilities in the neighbor- 
hood of half a billion dollars for the discharge of which, in 
large part, there are no assured assets. Besides the necessity 
for putting these systems upon an equitable and sound financial 
basis, there is need for the establishment of retirement allow- 



Editorial Introduction 

ance systems in those states and localities which as yet have 
none. At present seventeen states have neither state nor local 
pension systems for their public school teachers, and in twelve 
of the remaining states there are only a few local systems. 
Approximately one-half of all the public school teachers in this 
.country are not covered by any pension provisions.^ 

It need not be pointed out that the making of adequate finan- 
cial provision for the retirement from service of teachers 
whose abilities have become impaired by age or otherwise is 
not simply a matter of equity and humanity and of signifi- 
cance from the standpoint of general social betterment. In 
several respects it is a question of direct administrative effi- 
ciency. For not only do proper retirement provisions make 
it possible to relieve the working force of relatively incom- 
petent members, but the teaching career is made more attrac- 
tive and thus draws to its service a better personnel and stimu- 
lates its members with a higher esprit de corps. 

A soundly constructed teachers' pension system is one that 
must meet a variety of requirements. Its financial arrange- 
ments must be such that permanent solvency is assured; the 
incidence of its burdens and benefits must be justly appor- 
tioned not only as between the different groups of teachers, 
but as between them and the public, as represented by the 
government; it must be so organized and administered that 
the greatest possible efficiency of service on the part of the 
teaching force will be secured; and, finally, it must make 
reasonably adequate provision for disabilities to the teachers 
concerned whether arising from old age, sickness or accident. 
So far as possible, too, provision should be made for satisfy- 
ing the equities involved when teachers are dismissed or them- 
selves desire to resign their posts. 

The present study, while not a pioneer one in the sense of 
being the first attempt to make a scientific investigation of 
teachers' pensions in the United States, is the first compre- 
hensive, critical, and descriptive treatment of the subject. 

^An investigation made in 1917 showed that there were then ninety-four 
teachers' retirement systems in operation. These systems covered 332, 554 
teachers. 

This did not include various mutual benefit associations, such as exist 
in St. Louis and Washington, D. C, with voluntary memberships and 
wholly financed by the teachers themselves. This Hst of ninety-four was 
made up entirely of schemes which were official and integral parts of the 
public school systems concerned. 

It should be noted, however, that this figure is obtained by including 
the entire teaching staffs within the jurisdictions concerned. The actual 

xvi 



Editorial Introduction 

In 1906, the state of Massachusetts appointed a commis- 
sion, with Mr. Magnus W. Alexander as chairman, to study 
the general problem of "old age pensions, annuities and insur- 
ance." Incidentally, the commission touched upon the prob- 
lem of pensions in the public service and published in 1910 
a report which stimulated a good deal of sound thought in the 
country. Beginning in 1910, Mr. Herbert D. Brown pre- 
pared a series of reports, all of which have been published by 
the national government, dealing with the civil service retire- 
ment system of Great Britain, New Zealand and New South 
Wales, Australia, and the problem of establishing a retire- 
ment system by the national government for its employees. 
The New York Bureau of Municipal Research became inter- 
ested in the pension problem soon after its establishment. It 
made a thorough actuarial investigation of the New York 
City Police Pension Fund — the first actuarial investigation 
of a civil service pension fund in this country — and prepared 
a report, which resulted in the establishment in New York 
City of a commission to investigate all the nine pension funds, 
including the teachers' fund, in operation in New York City 
and led to similar actuarial investigations of funds in other 
cities. The sound pension thought which emanated from 
these three active centers, Washington, New York City and 
Boston, spread over the entire country and affected the teach- 
ers' pension movement. 

The first to consider the establishment of a sound pension 
system for teachers was the state of Massachusetts. The 
state board of education was directed in 191 1 to investigate 
the establishment of a state-wide retirement system for teach- 
ers and to submit its recommendations before January, 1913. 
The investigation, aided by Mr. C. A. Prosser and Mr. W. I. 
Hamilton, resulted in the estabHshment in 1913 of the first 
scientifically constructed teachers' retirement system in this 
country. 

New York City came next with several attempts to reor- 

number of persons covered must have been considerably less since many 
exercised the right, ordinarily granted at the outset, to decline to be en- 
rolled. Participation of all new appointees being made compulsory, how- 
ever, the proportion of non-participants has been steadily diminishing. 
It should further be noted that the figures stated were compiled from the 
report of the United States Bureau of Education for 1917 and cover only 
the year 1915-16. Moreover, for some of the locaHties, the number of 
teachers was not given in the federal reports and had to be obtained 
through correspondence with the local pension fund officials. 



Editorial Introduction 

ganize its insolvent retirement fund for teachers. It finally 
effected a sound reorganization in 19 17. In the meanwhile 
the Carnegie Foundation for the Advancement of Teaching 
became convinced of the necessity for a reorganization of its 
retirement system for college professors. It began a study of 
the problem in 19 12 and since that time has reviewed in its 
annual reports the pension progress in the country, thus 
greatly contributing to the scientific consideration of the 
problem. 

The establishment of the sound systems of Massachusetts 
and New York City gave considerable impetus to the move- 
ment of reorganization. Connecticut followed the example 
of Massachusetts in establishing a similar system for its 
teachers. The state of Pennsylvana profited from the reor- 
ganization experience of Massachusetts and New York City, 
and established a new system introducing certain novel fea- 
tures and improvements. Illinois and New Jersey have 
appointed state commissions which are now considering the 
question of the reorganization of their teachers' retirement 
systems. 

The reports of each of these investigating commissions, 
arid the other publications mentioned, presented mainly a pic- 
ture of one or another local situation and discussed certain 
aspects of the problem, but made no attempt to survey the 
entire field of teachers' pension systems in this country, nor 
to examine the whole movement and summarize the princi- 
ples evolved and results accomplished. As the movement pro- 
gressed the need for such a broad investigation has been felt, 
and to answer this need the preparation of the present volume 
was undertaken. 

The first step in the investigation was to make a search 
through the session laws and codes of various states for all 
the laws which had been enacted with reference to teachers'' 
pensions. Annual school reports of the United States Bureau 
of Education and of the different states, official documents, 
educational magazines and other publications, which had 
appeared on the subject during the last thirty or forty years, 
were scrutinized, and an exhaustive bibliography was pre- 
pared. 

At the same time letters were sent to the officials in charge 
of the different systems, the existence of which was ascer- 
tained, requesting copies of financial reports, statistics and 



Editorial Introduction 

other information necessary for determining their financial 
operations and present condition. These letters elicited favor- 
able replies and secured considerable and very valuable ma- 
terial. 

In the chapters constituting Part I of the volume now 
published a description of the evolution of teachers' pensions 
and an analysis of the general problem of providing retirement 
allowances to teachers is given, together with a discussion of 
the principles governing the establishment and maintenance 
of sound systems. In Part II an account is given of the move- 
ment in the United States and a descriptive and critical exam- 
ination made of the history and present condition of the more 
important systems now in existence. Twenty-four systems 
were thus selected for detailed study, the main features de- 
termining their selection being their age, sources of support 
and scope of membership. The funds of fifteen of the systems 
thus selected are in part provided by contributions from the 
teachers organized under them ; four derive their funds wholly 
from this source ; while five of them make no demands upon 
the purses of the prospective beneficiaries. In the aggregate, 
it is estimated that the twenty-four systems described affect 
over three-quarters of all the teachers embraced in the ninety- 
four pension systems now in operation in the United States. 

In general, it may thus be said that the volume, combining 
as it does a discussion of principles with the description of the 
experiences of existing systems, should be not only a substan- 
tial contribution to the science of administration, but an imme- 
diate and practical aid to teachers, school authorities, legisla- 
tors and all other persons interested in solving the problem of 
reorganizing their own systems or establishing systems, in 
case they already have none, upon bases that have been tested 
by experience and are in accordance with sound social, eco- 
nomic, and financial principles. Furthermore, most of the 
considerations and principles which apply to the educational 
services of the state are applicable to the other administrative 
branches of our federal and state governments. Mr. Studen- 
sky's volume, therefore, finds a very proper place in the series 
of "Studies in Administration" which the Institute for Gov- 
ernment Research is publishing. 

During the opening months of 19 19 while this volume was 
in press, three states. New Jersey, Ohio and Vermont enacted 
laws establishing new pension systems on approved principles. 



Editorial Introduction 

These laws have been fully discussed in a concluding chap- 
ter which was added to the book while in press, and the laws 
themselves are reproduced in full in Appendix 3. It was 
not found practicable, however, to amend the text at every 
minor point to take account of the establishment of these 
new systems. 

W. F. WiLLOUGHBY. 



PART I 
THE PROBLEM OF TEACHERS' PENSIONS 



CHAPTER I 

THE EVOLUTION OF TEACHERS' PENSIONS IN 
THE UNITED STATES 

While the problem of teachers' pensions^ may in one sense 
be regarded as a purely technical one, it is in reality also his- 
torical. Only in the light of an understanding of the way in 
which the problem has assumed its present form, and of the 
attitude toward it on the part of both teachers and legislators 
that has resulted, can the technical considerations developed 
in the subsequent chapters be successfully applied. 

The history of the movement for teachers' retirement pen- 
sions in this countr}^ may be divided into three periods. The 
first period opened in 1869 with the establishment of teachers' 
assurance and mutual aid associations. The second period 
began in 1894 with the securing of retirement legislation, but 
without due regard to sound principles. The third period is 
now opening with a movement toward reorganization of exist- 
ing retirement funds and the establishment of new funds on 
a sound basis. 

The leading role in the movement during the first two 
periods was played by the teachers' associations. The atti- 
tude of the government and the public was one of indifference. 
With the new period, however, the government and the public 
have begun to take an active part in the teachers' retirement 
movement, and an intelligent cooperation between them and 
the teachers is developing. 

'The term "pension," as applied to amounts paid to employees after 
retirement from active service, is objected to by some as implying a pay- 
ment charitable in nature, that is, as a gift for which no full equivalent 
is returned on the part of the recipient. Therefore, viewing these pay- 
ments as essentially deferred payments for services actually rendered, 
we find employed such terms as "retirement allowances," "retirement 
salaries," "service annuities," or simply "annuities." In this volume, how- 
ever, the writer has not deemed it necessary to forego the use of the 
term pensions, although, when used, he does not intend to imply that a 
charitable element is involved. 



Teachers' Pension Systems in the United States 

Mutual Aid Associations. While sporadic organizations of 
teachers for social or other special purposes have no doubt 
existed in this country from early days, no recorded instance 
of a teachers' mutual aid society is found until 1869. In that 
year, in a certain large school in New York City, collection 
lists were several times circulated among the teachers with an 
appeal to them to contribute towards the payment of funeral 
expenses of a fellow teacher who had left no funds. It then 
occurred to Mr. Vanderbilt, a young and active teacher of one 
of the New York City schools, that instead of soliciting volun- 
tary contributions each time a death occurred, it would be far 
better to organize an association in which each member would 
pledge himself to contribute one dollar whenever called upon 
and would also be assured that a similar benefit would be paid 
upon his death by a similar assessment upon all other members. 
He called a meeting of teachers and they established the New 
York City Teachers' Mutual Life Assurance Association. 
The significance of the establishment of this association was 
the fact that besides mere philanthropy it introduced an ele- 
ment of self-protection — the contributor not only helped to 
defray the expenses of funeral to a fellow teacher but also 
secured a right to a like benefit for himself. Probably no one 
at that time thought that the estabhshment of this modest 
organization marked the beginning of a great mutual aid 
movement and later on of a pension movement among 
teachers. 

In Brooklyn, two years later, a similar organization was 
established. But the example of the teachers of these two 
cities was followed by the teachers of other cities only slowly. 
The Jersey City teachers founded an association in the year 
1880 and Camden followed in 1885. The provisions of these 
associations as compiled in 1897 ^^^ shown on the following 
page.' 



'The following data are extracted from a table published in Review 
of Reviews, June, 1897, p. 711. 



Evolution of Teachers' Pensions 



Name 


Date 

of 
Estab- 
lish- 
ment 


Member- 
ship 


Assess- 
ments 
on 
Call 


Annual 
Dues 


Amount of 
Benefits 

Sick Death 


Annual 
Income 


Capital 


New York City 
Teachers' Mu- 
ual Life Assur- 
ance Association 


1869 


2009 


$1 


None 


None 


$500 


None 




Brooklyn Teach- 
ers' Life Assur- 
ance Association 


1871 


1557 


$0.50 


u 


« 


$300 


a 


$556 


Jersey City Life 
Assurance Dept. 
Teachers' Asso- 
ciation 


1880 


300 


$1 






$300 






Camden Teach- 
ers' Insurance 
Benefit Associa- 
tion 


1885 


120 


$1 


« 


« 


$120 


« 









The benefit provided in the association of Camden was too 
small to cover more than the bare funeral expenses, but in 
the other associations the benefits provided the dependents 
with a few hundred dollars above the amount necessary 
for a modest funeral and might therefore be properly- 
termed life insurance. Viewed as measures of life insurance 
these associations appear primitive and imperfect. They re- 
quired no regular annual assessment but assessed their mem- 
bers whenever necessary; they had no capital and they con- 
sidered capital unnecessary. They did not understand that 
insurance could be sound only if based on mortality tables, 
and that the number of deaths among their members would 
increase in the future and would make the assessments on 
the younger members too burdensome. 

Sick Benefit Associations. Next to the problem of bury- 
ing the teacher and helping his dependents the problem of 
the sick teacher and the possibility of offering him at least 
temporary relief attracted the attention of the leaders of the 
mutual aid movement. Most of the associations established 



Teachers' Pension Systems in the United States 

after 1885 provided not only death benefits but also sick 
benefits payable for certain limited periods. The teachers of 
Detroit established such an association in 1888; those of St. 
Paul did the same in 1890; the Chicago teachers soon followed 
in 1891, and were joined by the teachers of Des Moines, Lin- 
coln and Evansville. Meanwhile a still more rapid progress 
was made in the East, among the teachers of Rochester, 
Buffalo, Paterson, Hoboken, Trenton, New Bedford, Swarth- 
more, Scranton, Baltimore, Savannah and others. 

In the development of these sick benefit societies, impor- 
tant improvements in the matter of financing the benefits were 
introduced. Unlike the lump sum death benefits, the sick 
benefits, which had to be paid day after day to many bene- 
ficiaries, could not be financed by means of sporadic assess- 
ments and without capital on hand. Regular annual dues 
were therefore introduced and the attempt made to build up 
permanent capital funds. Nevertheless, these associations 
were just as unsound financially as the pure life assurance 
societies earlier discussed. 

The amount of dues and benefits and other information 
about some of these associations are shown in the table on 
the page opposite. 

Old Age and Disahility- Annuity Associations. There 
were, of course, numerous cases which the life assurance and 
sick benefit associations could not help; for example, that of 
a teacher becoming permanently disabled through sickness, 
or becoming too old to continue teaching. Encouraged by the 
apparent success of the life assurance and sick benefit funds, 
the leaders of the teachers decided to take up this difficult 
problem and to organize associations which would provide 
these teachers not merely with temporary relief but with a 
permanent and urgently needed one in the form of annuities 
payable to the end of their lives. 

The teachers of New York City and Brooklyn were the 
pioneers of this movement. They established their voluntary 

6 



Evolution of Teachers' Pensions 



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c ?, 



85 83 



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o ^ o 3? 



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S 8 



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H< 



8§ 



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4) 4J 



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H o 



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O 4i 



Teachers' Pension Systems in the United States 

annuity associations in the year 1887. From New York this 
idea was carried to Boston, where it resulted in the estabHsh- 
ment of a similar association two years later. Philadelphia 
followed in 1890; Cincinnati in 1891 ; Massachusetts, Wash- 
ington, D. C, Connecticut, Baltimore and other cities and 
states during the next few years. 

The establishment of these and other associations of the 
same type met a great need among teachers. For the first 
time in the history of the educational system in this country, 
there was brought before the teachers and before the public 
the problem of the retirement of the aged and disabled teacher. 

The provisions of most of these funds were patterned after 
the provisions of the New York fund. In most of them annu- 
ities were fixed at $600, the exceptions being the associations 
of Cincinnati and Omaha, with annuities of $500 and $400 
respectively, and the association of Brooklyn which provided 
annuities of one-half the fixed salary of the retiring teacher. 
Annuities were to be paid to those members who retired from 
the teaching service under either of the following condi- 
tions : ( I ) completion of a certain length of service, which 
varied from 30 to 40 years in different systems, frequently 
with a lower requirement by five years for women than for 
men; (2) a proof of disability, irrespective of the length of 
service. The money necessary for the payment of these 
benefits was to be provided by means of annual dues from 
the members of the association at the rate of i per cent of 
their salary and was to be supplemented by donations and 
voluntary contributions from the public. 

Several of the new associations combined life insurance^ 
sick benefits and annuities. The Philadelphia fund, estab- 
lished in 1890, and the Washington, D. C. fund, established 
in 1894, were of this type. The constitution of the Phila- 
delphia fund stated that : 

The object of this association shall be to provide for and 
to furnish pecuniary aid from time to time to such of its 

8 



Evolution of Teachers' Pensions 



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Teachers' Pension Systems in the United States 

members as shall be incapacitated from teaching in the pub- 
lic schools of the city of Philadelphia by reason of sickness 
or advanced age — and also to receive, hold and expend dona- 
tions of money for aid of other teachers not hereinbefore pro- 
vided for in such manner as the donors may prescribe. 

In framing the provisions of these associations and in mak- 
ing their appeals for members, the promoters of this move- 
ment had to take into account the differences between the 
older and younger teachers and between the lower and higher 
paid individuals. In the case of the older teachers an appeal 
could be made on the ground of personal advantage. The 
older teachers were entering the associations mainly with a 
view to protecting themselves against becoming dependent in 
their old age. They realized that in return for their small 
contributions the associations offered them an annuity which 
no insurance company would offer them at the same price. If 
they joined the fund they could soon apply for these benefits. 
They had little to lose and much to gain; therefore, they 
cheerfully joined the associations. For this reason the major- 
ity of the membership of these associations consisted of 
older teachers. 

A different appeal had to be made to the younger teachers, 
for they did not fear the coming of old age and did not seek 
to protect themselves against distant risks. The time, thirty 
or forty years distant, when they could claim the benefits from 
the fund seemed so remote, the possibility of remaining so 
long in the service seemed so dubious, and the reasons for 
worrying about the dim future so slight, that they cared little 
whether or not they would ever receive any benefits from a 
fund. Besides, they wanted their entire salary for their imme- 
diate enjoyment and did not care to deprive themselves of even 
I per cent of that salary for the sake of that vague future. 
For this reason it was extremely difficult to make the young 
teachers enter the societies. And yet they constituted the 
greater number and it was upon their support that the success 
of the associations depended. The few young teachers who 



Evolution of Teachers' Pensions 

did join the associations did so mainly to help the older mem- 
bers of the profession. The small expense connected with 
membership they justified as their contribution to the welfare 
of the profession. Only by appealing to their idealism could 
the promoters of the associations succeed in soliciting their 
support. 

No serious conflict between the lower and higher paid teach- 
ers arose, however, in this movement. The lower grade 
teachers were in the majority and favored the idea that all 
members, regardless of their salary, should receive the same 
amount of benefit but should pay for it in proportion to their 
salary. In this way they would bear a smaller part of the 
burden than the higher paid teachers. The latter, expecting 
soon to retire, readily agreed to pay the higher rate. 

Brooklyn was the only fund which adopted a different 
principle, i. e., that members should contribute in proportion 
to their salary and should also receive benefits proportionate 
to their salaries. This principle was far less popular with 
the lower grades and did not, therefore, gain wide acceptance 
in the mutual aid movement. 

In fixing the rate of contributions the promoters of the as- 
sociations had to take into account the fact that most of the 
teachers would not enter the association if a high rate of 
contributions were required. For this reason a contribution 
of I per cent of salary was adopted. 

A very important question with regard to contributions of 
the teachers whose connection with the association would 
terminate through resignation, dismissal or death before they 
completed the required length of service came now to light. 
The principle was adopted that they should forfeit all their 
contributions, and that the forfeited contributions should be 
used to augment the fund available for the payment of bene- 
fits to those teachers who survived, completed the required 
period of service, and were thus entitled to retirement. These 
forfeitures were considered as one of the most important 

II 



Teachers' Pension Systems in the United States 

sources of revenue of the associations. This principle, as 
applied to the retirement problem, was borrowed from the 
oldest retirement funds abroad, where it is known under the 
name of "tontine." In some associations a teacher who re- 
signed or was dismissed received a refund of one-third of the 
amount contributed. Objections raised even to partial re- 
funds were to the effect that the interests of the individual 
who resigned or was dismissed from the profession deserved 
less consideration than the interests of the entire profession.^ 

Attitude of Government and Public. The government 
took no interest in the mutual aid movement among the 
teachers. It saw no reason for interfering in what it re- 
garded as a private teachers' association. Neither did the 
teachers seek the assistance of the government in the affairs 
of their organizations. At that time they were probably as 
reluctant as the government to admit any form of paternal- 
ism. In this respect both sides followed the traditions of the 
American government and of American public opinion. 

Neither the teachers nor the government officials then 
realized that the participation of the government in this move- 
ment was desirable on the ground that an unsatisfactory solu- 
tion of the old age and disability problem in the teaching serv- 
ice vitally affects the efficiency of that service and the inter- 
est of the schools. The idea of efficiency of service then did 
not occupy as prominent a position in the mind of the gov- 
ernment administrator, the government employee and the pub- 
lic at large as it does to-day. Government was managed loosely 
and public opinion was not as self-conscious and as effective 
as it is at the present time. 

At the same time the teachers felt that their cause deserved 
a sympathetic attitude from the public and that they could 
obtain voluntary contributions from the public without hav- 
ing recourse to the governmental machinery and incurring 
the danger of falling under its control. Realizing the need 

^The inequitable features of the "tontine" are more fully discussed 
on pp. io8, 109. 

12 



Evolution of Teachers' Pensions 

for a larger capital and the inadequacy of their own con- 
tributions, they set to work arranging bazaars for the benefit 
of the associations, soliciting the aid of charitable ladies and 
collecting funds among public-spirited citizens. 

The public responded generously to the teachers' campaign. 
A most successful bazaar was arranged in Boston, by which 
more than $56,000 was raised. During the first twelve years 
of the existence of the New York City association, the teach- 
ers accumulated from their own contributions about $64,000 
and added to this about $76,000 from bazaars and private 
donations. In Brooklyn, Philadelphia, Washington, D. C, 
and Baltimore, the associations secured more than half of 
their capital by means of bazaars and voluntary contributions 
from the public. 

Failure of Annuity Associations. Soon, however, certain 
features of the annuity associations met with criticism. In 
the first place the voluntary feature caused disappointment 
to their promoters because the teachers responded so slowly 
to their appeals. The promoters became tired of the continu- 
ous campaign to secure members, and began to favor the in- 
troduction of some measure which would compel all teachers 
to join the associations and thus increase its income. 

Secondly, the private character of these associations was 
objected to. It was urged that the retirement of old teachers 
benefited the schools and should, therefore, be made a matter 
of governmental concern. The following extract from a re- 
port of the Boston Mutual Benefit Association, which appeared 
in 1894 in the annual report of the Boston superintendent of 
schools, illustrates this idea: 

But for this beneficent institution many of these teachers 
would still be in the employ of the city although unable to do 
satisfactory work because of ill health or the infirmities of 
age. They have now given place to younger and more effi- 
cient teachers and the city secures the benefit while from the 
association they receive a comfortable income. Nor is this all. 
The nearly 1000 members feeling far less anxiety for the 

13 



Teachers' Pension Systems in the United States 

future because of membership, are daily doing better work 
than they could do if the shadows of coming adversities were 
ever resting upon them. 

The methods of securing the financial support of the public 
by appealing to individual philanthropy were also criticized 
because the income they provided was irregular and after all 
inadequate. 

Criticism centered on these defects. The less apparent but 
more fundamental defect — their actuarial unsoundness — 
escaped attention. To organize a sound annuity system is 
not an easy task. It involves the use of mortality rates, in- 
terest tables and mathematical formulae, by means of which 
an actuary can determine the cost of the annuities and the 
amount of premiums which should be charged at different 
ages. The annuity systems of every insurance company are 
organized upon this basis. But the mutual aid and annuity 
systems of the teachers were not thus organized. Their pro- 
moters thought that they could operate them without using 
mortality tables and without knowing the cost of annuities, 
and that they could require the same dues of all members and 
pay the same annuities to all, regardless of the difference in 
their ages. They fixed the dues at the uniform and entirely 
inadequate rate of i per cent of salary, and they wrongly ex- 
pected that the voluntary contributions from the citizens would 
sufficiently supplement the fund. 

Of course, with such serious defects these associations could 
not permanently exist. During the first few years when re- 
tirements were not numerous and the disbursements were 
small, their income appeared more than adequate. However, 
in the course of time the insufficiency of their income was 
bound to appear. 

The first association to which this happened was that of 
Brooklyn. New York City and other associations were next 
affected. The disbursements exceeded the receipts, benefits 
were prorated and their capital reduced. The old members 

14 



Evolution of Teachers' Pensions 

faithfully remained in the fund, because they still expected to 
receive some benefits from it, but the young members imme- 
diately lost all interest for the "lost cause" and withdrew 
in large numbers. These withdrawals caused a further panic 
among the members of the organizations and thus accelerated 
their collapse. 

The Beginnings of Unsound Legislation, 1894- 1896. 
The idea that soldiers and public employees should be "pen- 
sioned" for their public services, i. e. should receive on their 
retirement from the active service an annuity payable to the 
end of their lives either entirely or partly at the expense of 
the government, or, if at no expense to the government, at least 
under its management, and that such "pensions" should be 
established and governed by special laws, was imported to 
this country from Europe. There pension laws for the army 
and navy and the state and municipal employees, including 
teachers, had existed for many years. 

In the United States this idea was applied first to the army 
and navy, next, in 1859, to the policemen in the larger cities, 
and later to the firemen. But it was not at first applied to 
teachers. A comparison in the minds of the teachers of their 
status with that of the teachers abroad and the policemen and 
firemen in this country was, therefore, inevitable. As early 
as 1879 ^^^ 1 88 1 in New York City and Brooklyn, and in 
1891 in New Jersey, small groups of teachers were discussing 
the idea of obtaining pension legislation. Two tendencies 
were apparent; one in favor of a straight pension payable 
entirely at the expense of the government, the other in favor 
of the establishment of a contributory retirement fund. The 
first made little headway, as public opinion was opposed to it. 
The latter made no considerable progress until a few years 
after the establishment of the first private annuity associa- 
tions. Then it began rapidly to gain in strength, scope and 
clearness. In the first place, the operation of these associa- 
tions strongly supported the contention that the retirement of 

15 



Teachers' Pension Systems in the United States 

old teachers benefited the schools and the government and 
should, therefore, be made to some extent a matter of govern- 
mental concern. In the second place, the apparent weakness 
of these voluntary associations offered strong support to the 
idea that legislation should be secured officially establishing 
retirement systems, compelling the teachers to enter, and mak- 
ing detailed provisions for their retirement. Lastly, the ob- 
vious insufficiency of the income of the annuity associations 
and the disappointment in private philanthropy as a source of 
income fostered the idea that the government should bear 
either a partial or entire responsibility for the adequacy of the 
retirement funds. 

Weak attempts to secure pension legislation were made in 
New York City and Brooklyn as early as 1879; and such 
attempts were from time to time repeated by the teachers of 
that city and of other cities in various parts of the country. 

The board of education in New York City was opposed 
to retirement legislation and the task of winning over the 
legislators and the governor was a difficult one. In 1894, after 
several failures, the teachers prepared a very mild measure. 
It provided for the establishment of a fund the resources of 
which were to come from deductions made from the pay of 
the teachers because of absence. No contributions were re- 
quired of the teachers. Despite the opposition of the board 
of education, the support of the governor was secured and 
thus in 1894 the first legislation creating a teachers' pension 
fund in this country was enacted. 

It is notable that this pioneer legislation should have adopted 
no definite principle in the matter of whether the teachers or 
the government, or both sides, should support the system. The 
form of revenue was such as to obscure its real derivation. 
It was generally accepted that the revenue from absence de- 
ductions was derived from the teachers, although as a matter 
of fact it really came from the public treasury.^ 

^The fund was also authorized by the law to receive donations, lega- 
cies, etc. 

16 



Evolution of Teachers' Pensions 

Pensions of one-half of the final salary, not exceeding 
$i,ooo, could be granted by a two-thirds vote of the board of 
education to teachers mentally or physically disabled for the 
performance of duty, upon the recommendation of the city 
superintendent. The service requirement was 30 years for 
women teachers, and 35 years for men teachers. The board 
of education was given complete charge of the fund and the 
establishment of by-laws for its management. It was em- 
powered to reduce pensions to a uniform rate. The comp- 
troller of the city was made treasurer of the fund. 

The establishment of the New York City fund was the sig- 
nal for renewed activity on the part of the teachers in other 
cities; bills were prepared in some places by copying almost 
verbatim the New York City law, and in the two years fol- 
lowing no less than eight other funds were created. In 1895 
funds were established in Brooklyn, Detroit, Chicago, St. 
Louis and San Francisco; and in 1896 in Buffalo, Cincinnati 
and the state of New Jersey. In every case membership in 
the fund involved a contribution to it. In three cases — San 
Francisco, St. Louis and New Jersey — membership was vol- 
untary; in the other five funds it was compulsory. 

Voluntary Funds Supported by Contributions. While 
the San Francisco and St. Louis funds were established in 
1895, a year previous to the establishment of the New Jersey 
fund, the history of the latter is perhaps the most illuminating. 
The bill providing for the New Jersey fund was first intro- 
duced in the legislature in 1891, and called for a pure and 
simple half-pay pension, to be paid entirely by the govern- 
ment. The repeated defeat of this measure, which sought 
at a stroke to legislate in the most extreme form of govern- 
ment pension systems, finally caused the proponents of the 
measure to abandon their proposal in favor of a plan for a 
voluntary self-sustaining fund — in effect a mutual old age 
and invalidity insurance association, with the state as custo- 
dian and administrator of the funds. In this form the meas- 
ure became law in 1896. 

17 



Teachers' Pension Systems in the United States 

Under the provisions of the law, membership in the funds 
was purely voluntary; members were to contribute i per cent 
of their salary and were to receive on disability after 20 
years of service an annuity of one-half of their salary, with 
a minimum of $250 and a maximum of $600. After the pas- 
sage of the law teachers had only three months in which to 
join. 

The difficulties involved in framing a pension system satis- 
factory to all elements were not escaped in this early attempt. 

Not a provision, not a clause does this law contain that has 
not been objected to by some teacher or by the press. Young 
teachers found twenty years too long; older teachers found it 
too short, and feared that it might operate against their tenure 
in office. The former thought twenty years should not be 
coupled with disability; the latter thought it should. Low 
salaried teachers said one per cent assessments were too small ; 
principals and superintendents said it was too large. Women 
thought we could not afford a maximum annuity of $600; men 
thought it too low. The press warned the teachers 'if you go 
in you cannot get out.' Teachers complained about the limited 
time given them for decision. Those who joined it thought 
all should be compelled to join and the philanthropic said 
the rebate clause was unnecessary. Certain principals influ- 
enced their teachers not to join. Others, willing to help any 
advance in the right direction, swung with full corps into line. 
Two places reported a meagre membership assigned as the 
reason that their teachers were from other states and did not 
expect to remain in New Jersey. The others were young and 
would probably marry.^ 

The table on page 19 shows the principal features of the San 
Francisco, St. Louis and New Jersey voluntary funds : 

It is of interest to note that the membership of each of 
these funds was less than one-half of the number of teachers 
eligible, and that the rates of contribution were so inadequate 
that after two years the larger part of their income had to be 

'Article of Miss E. A. Allen in Review of Reviews, June, 1897. 
18 



Evolution of Teachers' Pensions 



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Teachers' Pension Systems in the United States 

used for the payment of benefits, leaving only a small portion 
of the income to be set aside as a reserve. The New Jersey 
fund was forced every few years thereafter to seek amend- 
ments allowing the teachers another opportunity to join the 
fund and offering them various inducements. Seven years 
later it was necessary to secure an amendment doubling and 
even trebling the rates of contribution and adopting the com- 
pulsory basis for all new teachers. 

Compulsory Funds Supported by Contributions. As al- 
ready indicated, the legislation adopted for Brooklyn, Buffalo, 
Cincinnati, Detroit and Chicago in the years 1895-96 was 
compulsory in character. The Brooklyn system differed from 
all the others, however, in that under it the strictly compul- 
sory feature covered only the new entrants. An option was 
given to teachers then in the service to join or not to join the 
fund, but once the option was exercised, the decision could 
not be changed. This semi-compulsory feature was a com- 
promise between the opponents and proponents of compulsion, 
and helped to overcome the opposition of some elements in 
the teaching force. 

It is interesting at this point to compare the effects of grad- 
ual and violent movements. Having started with a mild meas- 
ure the leaders of the movement in Brooklyn succeeded in 
their subsequent attempt to extend the compulsory feature to 
all teachers. On the other hand, in Chicago, the thorough- 
going compulsory feature created a reaction against the meas- 
ure and against its former leaders, resulting in legislation re- 
pealing the compulsory law and reverting to an entirely volun- 
tary provision. This extreme in turn almost wrecked the 
fund and led to another movement, this time, happily, for a 
mild compulsory law. 

The provisions of the early compulsory funds under dis- 
cussion are shown in the table on the page opposite. 

It is to be noted that in the case of all these funds the teach- 
ers contributed i per cent of their salary, whereas the govern- 

20 



Evolution of Teachers' Pensions 





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21 



Teachers' Pension Systems in the United States 

ment did not contribute at all, and that the benefits were fixed 
at one-half of the salary. The principle of a pension propor- 
tionate to salary, which a few years before was recognized 
only by the Brooklyn Aid Association, was thus adopted in all 
the five compulsory funds and was soon to become almost 
universal. 

Unsoundness of the Early Funds. The several pioneer 
funds, to which attention has been given, varied in matters of 
detail, but they were all alike in the unsoundness of the pro- 
vision made for their financial stability. They followed the 
unsound method which had been used by the mutual aid asso- 
ciations; pensions were paid from the annual income of the 
fund, and the balance of the income set aside as capital. No 
mortality rates were adopted and no attempts were made to 
determine the cost of retirement benefits, the Habilities of the 
fund to all its members, or the amount of income and reserve 
which the fund should possess if it was in the future to meet 
its obligations. In most of the systems a provision was 
adopted that in case of insuf^ciency of fund the benefits might 
be prorated, but it was optimistically thought that this would 
never happen. 

In some cases fair warning was given. At the establish- 
ment of the New Jersey retirement fund an actuary's report 
was published in the press, in which the progress of the fund 
was estimated for the next twenty years and the demonstra- 
tion made "in plain figures that on the most favorable esti- 
mates the fund must fall far behind the demands made upon 
it. More than half the income needed to meet obligations is 
provided for only by hopes." But tlie promoters of the early 
retirement funds scorned any suggestion that actuarial meth- 
ods should be invoked. In replying to an actuary's criticism 
of one of these annuity systems, its secretary wrote that 
"purely business principles would dictate that we make all 
restrictions as to age, health, etc. that insurance companies 
do" as if the entire technique of insurance companies in- 



Evolution of Teachers' Pensions 

volved nothing else but the making of a few simple restric- 
tions. And again, "We have hearts ready to respond to our 
needy ones and hands willing to work for them. Can the 
'expert' credit these to the assets of his insurance company?'' 
The inevitable fruits of such an attitude as this were not long 
in showing themselves. 

Development of Governmental Contributions. The i per 

cent contribution which already proved inadequate in the ex- 
perience of mutual aid associations, was also bound to prove 
inadequate in the retirement funds. In Cincinnati this be- 
came clear within two years after the establishment of the 
fund; in other cities a longer period elapsed but the conclu- 
sion was equally plain. Unless the rate of teachers' contribu- 
tions were increased or another source of income provided, 
these funds could not continue to provide the promised bene- 
fits for any considerable length of time. In most cases the 
attempt was naturally made to secure aid from the govern- 
ment. 

The fact that retirement funds for teachers existed by legis- 
lative authority and were to some extent a governmental 
function, was now more or less firmly established in the minds 
of government officials and legislators. The wise action of 
the teachers in giving the government officials the adminis- 
tration and custody of the funds had resulted in the govern- 
ment becoming in a sense responsible for the sufficiency of 
the funds. These facts paved the way for the next logical 
step — that of securing legislation which would make the city 
contribute to the retirement funds. 

Here again the movement took the path of least resistance. 
The leaders of the teachers did not ask for a direct contribu- 
tion from the city budget, because this would have raised an 
undesirable discussion and perhaps an opposition on the part 
of the teachers. They looked for some special source of in- 
come which was lying idle or was used for miscellaneous 

23 



Teachers' Pension Systems in the United States 

contingencies and could be quietly diverted to the teachers' 
retirement fund. 

This may be illustrated by the case of New York City. 
When it began to be realized, in 1896, that in a year or two 
the income of the fund, which was derived wholly from ab- 
sence deductions, would be insufficient, the leaders of the 
movement concentrated their efforts upon securing a portion 
of the excise taxes. Their efforts were strengthened by two 
arguments : in the first place, the police pension fund had al- 
ready enjoyed for many years a portion of these taxes and 
there was no reason why the teachers' retirement fund should 
not also partake therefrom; in the second place, the idea of 
using money thus derived would find favor in the eyes of the 
public. The bill which they framed provided for a gov- 
ernmental contribution of 5 per cent of excise taxes, and they 
secured its passage without considerable opposition. Simi- 
larly, in Chicago, when the fund was found in the years 
1901-07 to be on the point of wreckage, the attempt was made, 
with eventual success, to have the interest on the school funds 
turned over to the pension fund. 

The success of the teachers in getting the government to 
make in some form or other a contribution to their retire- 
ment fund led to further movements in the same direction. As 
the disbursements increased and insufficiencies of income 
threatened their funds, they faced the problem of either in- 
creasing their own contributions or else securing an increase 
of the government's contribution. Naturally the teachers pre- 
ferred the latter alternative. 

Under these conditions less and less emphasis was placed on 
the old idea that the teacher benefits by contributing to a re- 
tirement fund, and more and more on the newer idea that the 
school system receives the chief benefit. In trying to obtain 
an increase of the government's contribution the leaders of 
the movement stressed the argument that efficiency of serv- 
ice is secured by the operation of a retirement fund and that 

24 



Evolution of Teachers' Pensions 

the primary obligation to support the fund rests, therefore, 
upon the government. 

As a result, the governmental contribution, originally in- 
voked purely as a relief measure, came more and more to be 
regarded as properly the principal if not the sole source of 
income for the pension funds. In virtually all the funds the 
tendency was for the governmental contribution steadily to 
rise, while the teachers' contribution remained stationary or 
even diminished. The tendency is well illustrated by the expe- 
rience of Chicago. 

Up to 1907 the teachers were the only contributors to the 
Chicago fund. In 1907 and 1909 their leaders succeeded in 
obtaining a city contribution in the form of interest on school 
funds. Two years later they secured a city contribution 
equal to that of the teachers. They urged that the teachers 
had been "generous beyond their means," and that it was 
impossible for them to set aside from their salaries more than 
they had been contributing. Hardly three years passed after 
this increase of the city's contribution when the teachers 
secured still further legislation making it possible for the city 
to contribute twice as much as they themselves did. 

A similar process took place in Brooklyn and New York. 
To the Brooklyn fund, established in 1895, the teachers con- 
tributed I per cent of their salary. Next they got the city to 
contribute to their fund a portion of the excise taxes and (at 
the time of the consolidation of the Brooklyn with the New 
York City fund) the absence deductions. Believing that these 
two sources of income would be sufficient and that it would 
not be necessary for them to contribute anything, they secured 
at the same time the abolition of their own contributions. 
This resulted in a rapid decrease during the next three years 
of the excess income of the fund, a decrease which in 1905 
threatened the fund with disaster. Realizing that they could 
not obtain at that time a further increase of the government's 
contribution, the leaders of the teachers were compelled to 

25 



Teachers' Pension Systems in the United States 

obtain the restoration of a provision for contributions from the 
teachers. Ten years later the increasing disbursements of the 
fund exceeded its receipts, and it became apparent that the 
rate of contributions was inadequate and would have to be 
increased, but so strong an opposition was shown by the teach- 
ers to any increase of their contributions that the unsound 
condition of the fund was permitted to continue. 

The atrophy, in the minds of the teachers, of the principles 
of self-help and mutual aid may be attributed in large meas- 
ure to two special conditions — the forfeiture of contributions 
at resignation and dismissal (the tontine feature) which made 
the young teachers lose interest in the fund, and the entirely 
compulsory and automatic way in which their contributions 
were exacted of them. 

The growing idea that the sole purpose of establishing a 
retirement system is to secure efficiency of service and that 
the government should, therefore, bear the entire expense 
thus found favor in a number of cities and states in which 
the establishment of a retirement system was contemplated. 
Between the years 1894 and 191 7, no less than six cities and 
five states adopted teachers' pension systems founded upon 
this principle. During the same years there were set up in 
sixty-four cities and fourteen states, systems which provided 
for joint contributions by the government and the teachers. 

Unsoundness of Funds Demonstrated. The government 
subsidies obtained by the unsound contributory funds en- 
abled them to continue for a number of years. But in the 
fixing of those subsidies the teachings of actuarial science 
were as a rule no more regarded than they had been in con- 
nection with the fixing of the teachers' contributions. Sooner 
or later the unsoundness of tlie funds and the impossibility 
of continuing them on the existing basis became apparent. 

The Chicago fund was one of the first to become insolvent. 
This happened in the year 1900. In response to the demand 
of a convention of contributors, the board of trustees employed 

26 



Evolution of Teachers' Pensions 

an actuary to examine the condition of the fund. The actuary 
reported that "in no ordinary case would the contribution of 
I per cent of salary provide an annuity much if at all exceed- 
ing $50 per annum," — yet the fund had been paying annuities 
between $400 and $600. The actuary suggested a fundamen- 
tal reorganization of the fund under which the contri- 
butions and annuities should vary according to age of the 
contributor. This advice however was not heeded. Instead 
the attempt was made to secure a contribution from the city. 
They seemed to think that the fund though actuarially un- 
sound could operate for many more years if the vast resources 
of the city would support it. Thus the report of the actuary 
was forgotten and the actuarial reorganization of the fund 
postponed. 

In New York City the fund operated for fifteen years with- 
out much doubt being raised as to its financial soundness. 
There, too, the confidence in the city's support overshadowed 
in the minds of the teachers any uneasiness as to the adequacy 
of their fund. Not until the disbursements exceeded the re- 
ceipts in the )'ear 1911 did the managers engage an actuary. 
But they did not adopt his recommendations as to putting the 
fund on an actuarial basis and increasing the contributions to 
an adequate rate because they knew that higher contributions 
would be solidly opposed by the teaching body. Instead, vari- 
ous makeshifts were proposed by the managers of the fund 
but were not, however, adopted by the city authorities, who 
■were at that time already advised that the fund was inherently 
insolvent and would have to be liquidated and replaced by an 
altogether different system. 

Even where it is appreciated that the fund is not on an alto- 
gether sound basis, seldom is the extent of the liabilities in- 
curred as a result of such unsound operation adequately recog- 
nized. Thus, in the case of the old New York City fund, 
though the inadequacy of the fund had frequently been alleged, 

27 



Teachers' Pension Systems in the United States 

it required an actuarial investigation^ to demonstrate that the 
HabiHties incurred by the fund had exceeded its assets by the 
staggering total of over $54,000,000. The balance sheet of 
the fund, as developed by this investigation, and some of the 
comments of the city's commission on pensions on the facts 
disclosed are worthy of reproduction." 

BALANCE SHEET 
OLD NEW YORK CITY TEACHERS' RETIREMENT FUND 
June 30, 1914 

LIABILITIES 

Value of 1,521 pensions already granted $11,581,210 

Value of prospective pensions to teachers now in service 58,228,550 

Total $69,809,760 

ASSETS 

Funds in hand $882,715 

Value of future i per cent salary contributions of teachers 

nov^r in service 4>i83,725 

Value of future city contributions of unexcused absence de- 
ductions and 5 per cent of excise taxes which can be 
credited to teachers now in service 10,000,000 

DEFICIENCY, UNPROVIDED FOR 54,743,320 

Total $69,809,760 

The liabilities of the fund show the discounted, or "present," value 
of future pension payments. In explanation, the total liability of the 
fund shown in the balance sheet in the sum of $69,809,760 represents the 
capital amount which, if invested on June 30, 1914, will be just sufficient, 
together with future interest accumulations at 4 per cent, compounded 
annually, to make future pension payments to teachers already retired 
and to those teachers in active service on that date who subsequently 
retire. * * * 

The total of the assets — $15,066,440 — is inadequate to equal the total 
liabilities of $69,809,760 by $54,743,320. The amount of this deficiency 
represents the capital, or reserve, which should have been on hand in 
the fund in addition to the $882,715 on June 30, 1914, to make the fund 

^In an actuarial investigation of a fund, the actuary first ascertains 
the amount of future payments of the fund to all its present pensioners 
and active members until the death of the last present member, and the 
amount of contributions which the fund is expected to receive on account 
of its present members. Both these amounts, the liabilities and the assets 
respectively, are then discounted back to the date of valuation and the 
amount of the deficiency is obtained by subtracting the latter from the 
former. For further discussion of actuarial processes, see pages loi 
and 102. 

^New York (City) Commission on Pensions, Report on the Teachers' 
Retirement Fund (1915), p. 30 ff. 

28 



Evolution of Teachers' Pensions 

solvent. It would have enabled the fund, together with future accumula- 
tions of 4 per cent compound interest, to supplement its inadequate future 
income. 

The large amount of shortage— $54,743,320— which . is a direct result 
of the fund's insufficient income during the 21 years of its past operation, 
does not give, however, an adequate idea of the seriousness of the situa- 
tion. It merely represents the deficiency as it existed on June 30, 1914- 
The fund's reorganization is made more difficult as time passes, since 
under the present method of operation it merely serves as a means of 
developing a constantly increasing deficit. 

The rapid increase in the deficiency, due to the absence of the reserve 
of $54,743,320, may be easily appreciated when it is considered that simple 
interest alone at 4 per cent of the above amount would have yielded to 
the fund $2,189,733 for the year ending June 30, 1915, The lack of in- 
terest accumulations therefore increased the deficiency during one year 
to $56,933,053- 

A parallel condition could be demonstrated for virtually all 
the pension funds of this country except those few which have 
recently been reorganized on an actuarial basis — Massachu- 
setts, New York City, Pennsylvania and Connecticut. They 
are insolvent in so far as they have failed to provide for ade- 
quate reserves with which to meet accrued liabilities as well 
as liabilities incurred through services rendered since the 
establishment of the system. It matters not that most of these 
systems are still able to make payments, still have unexpended 
cash on hand, and are and will for a few years continue to be 
able to meet their payments. They are no less insolvent than 
the systems which are already bankrupt. Only by shifting 
their huge deficiencies ahead year by year do they continue 
their existence. By doing so they increase of course these 
deficiencies because of the continued failure to discount future 
liabilities. The longer they operate, therefore, the greater 
are the deficiencies and the more insolvent the funds become. 

Present Extent of Teachers' Pension Systems. The 

establishment, in the years 1894- 1897, of the nine pioneer sys- 
tems has been treated in a preceding section. In 1898 
retirement systems were established in Charleston and New- 
port, so that by the close of the century there were in exist- 
ence eleven systems, but one of which was state-wide, while 
the others applied in every case to large cities only. 

29 



Teachers' Pension Systems in the United States 

The next decade witnessed a steady development of the 
teachers' pension .movement. Three state and twenty-eight 
local systems were established, so that in 1910 there was a 
total of four s^te and thirty-eight local systems in operation. 

Jt is. within the present decade, however, that the move- 
ment has attained its fullest development. Since 1910 it has 
gathered increasing momentum with each succeeding year. 
Two large state-wide systems, those of New York and Wis- 
consin, as well as nine local systems, began operations in 
191 1. The state system of Arizona and six local pension 
funds were added in 1912. The greatest activity, however, 
took place in 1913, 1914 and 191 5. During these years, no 
less than thirteen state-wide and eighteen local systems were 
created, directly affecting about 127,000 teachers. With the 
latest addition to the list in May, 1916, of the Erie Teachers' 
Pension Fund, and in 191 7 of the Pennsylvania and Con- 
necticut funds, there were twenty-two state and seventy-two 
local pension systems in operation affecting approximately 
332,554 teachers 

The table on the page opposite shows for each year, from 
1894 to 1916 inclusive, the several systems established. 

Growth of State- Wide Systems.^ Of the thirty-two states 
in which teachers' pension systems of whatever kind now 
exist, twenty-two have state-wide systems.^ In these twenty- 
two state-wide systems are embraced nearly four-fifths of all 
the teachers covered by pension systems in this country.^ Yet 

^The term "state-wide" does not necessarily mean that all the teachers 
of the state are members of the system. In case membership is voluntary, 
it simply means that it is open to the teachers from any part of the state. 

^In thirteen of these twenty-two states, local systems, totaling forty- 
two in number, are still in existence as a result of earlier legislation. 

'The distribution of teachers under state and local systems in 1917 
was as follows : 

No. of 
Systems No. of Systems Teachers Covered 

State systems 22 249,380 

Local systems : 

In states having state systems also. . 42 • 66,604 

In states having no state systems... 30 16,570 



94 332,554 

30 



Evolution of Teachers' Pensions 






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31 



ffi CT) 05i: 



Teachers' Pension Systems in the United States 

these state-wide systems are of comparatively recent origin. 
The tendency toward such systems is an important develop- 
ment in the teachers' pension problem and indicates that the 
pensioning of teachers employed by small communities is 
more and more recognized as a state function. 

The assembling of teachers in large groups for retirement 
purposes permits a wider uniformity in the application of 
principles and facilitates desirable shifting of teachers within 
a state without the complications brought about by forfeitures 
of pension rights. The larger systems have the added advan- 
tage of permitting scientific management and consequently of 
securing financial stability. Large numbers give scope for 
the operation of the law of probabilities affecting deaths, re- 
tirements, resignations and other factors, on the correct inter- 
pretation of which the solvency of a pension system neces- 
sarily depends. 

The separate unrelated existence of small pension funds^ 
will inevitably be discontinued if the present development of 
state pension systems progresses. A foreshadowing of this 
probability is found in the teachers' retirement plan of the 
state of New York, which offers to local systems the option 
to be absorbed by the state fund upon a petition signed by 
two-thirds of their members. By the close of 1915, nine of 
the seventeen local pension systems in the state of New York 
had availed themselves of this opportunity," and the teachers 
of other localities contemplate similar action. Another prec- 
edent of this kind is furnished by the state of Indiana which, 
for the purpose of bringing its teachers into the state-wide 
pension system established in 191 5, is subdivided into 148 
units. ^ Each unit — including those of Indianapolis, Terre 
Haute, Evansville and South Bend, which had previously 

'Of ^2 local systems, 34 have a membership of less than 500 teachers 
each, 20 systems a membership of less than 250, and 7 have a membership 
of less than 100. 

2They are enumerated in table on p. 180. 

'92 counties, 51 cities with more than 5,000 population, and 6 state 
institutions. 

32 



Evolution of Teachers' Pensions 

established local pension funds — may join the state system 
upon a majority vote of its local authorities and teachers. 
During the year following the enactment of this law, thirty 
units, including Evansville, were absorbed by the state system, 
and since that time undoubtedly many more have been in- 
cluded. The system of Massachusetts, which was established 
in 19 1 3, took in the fourteen local systems which had been 
founded under the permissive act of 1908. The new system 
of Pennsylvania, which covers all the teachers in the state 
not hitherto provided for, allows the local systems which 
had been previously established to join the state system and 
become subject to its provisions if two-thirds of their mem- 
bers favor a merger. It is probable that the majority of the 
ten local systems will adopt the new law and merge with the 
state system. 

The tendency toward uniformity and consolidation is not 
so apparent, however, in the case of the larger cities. The 
city of New York recently reorganized its old system on a 
sound actuarial foundation, instead of availing itself of the 
privileges of joining the state system which has not been as 
yet reorganized on a sound basis. The city of Philadelphia 
is now engaged in the work of reorganizing its old retirement 
system. It is considering a proposition by which it will not 
only accept provisions of the state systems but also provide for 
its teachers certain additional benefits and introduce certain 
novel features. 

It is possible that the future tendency in the field of teachers' 
pensions will be more or less similar to the present tendency 
in the field of education, in which the state tends to maintain 
certain minimum uniform standards, at the same time allow- 
ing local units to introduce higher standards in their schools. 
In a similar manner the state-wide pension systems will per- 
haps maintain certain minimum uniform pension benefits and 
administer them to the better advantage of all the teachers 
and all the schools in the state, at the same time allowing 

33 



Teachers' Pension Systems in the United States 

the local units to provide for their teachers, on a sound act- 
uarial basis, additional benefits and introduce such improve- 
ments as they may deem necessary. Greater progress may 
perhaps be achieved this way. After the various improve- 
ments and experiments have been locally tested, those which 
have been found most sound can be adopted as state-wide 
measures. Thus, the state systems and the local systems can 
stimulate each other toward greater progress. 

Conclusion: Present Tendencies and Forces. The pres- 
ent is a period of readjustment. Not only is the appreciation 
becoming more general that nearly all of the existing systems 
are financially unsound and must be radically reorganized if 
they are to continue in operation, but a truer estimate is 
being formed, not only by the teachers themselves, but by 
legislatures and state and local officials and the public gen- 
erally, of the significance of the teachers' pension movement. 
The principles discussed in the succeeding chapters of this 
volume do not need to be here rehearsed, but it may be said 
that a broadening recognition of them is operating through- 
out the United States as a force tending to bring about a 
proper relation between the interests of the teachers, of the 
government service in which they are employed, and of the 
public of which they constitute an important group. This is 
reflected not only in the character of benefits supplied and 
the terms upon which they are granted, but in the forms of 
management and control and the proper balancing of indi- 
vidual assessments or contributions and the grants from the 
public purse. 



34 



CHAPTER II 
THE TEACHERS' PENSION PROBLEM OUTLINED 

In the preceding chapter the trend of the development of 
teachers' pension systems from a condition of financial un- 
soundness to one of actuarial correctness was pointed out. 
In the present chapter the chief problems, actuarial and social, 
involved in the establishment of a sound system will be 
defined, and the way prepared for the critical and detailed 
discussion of those problems in the chapters which follow. 
These problems relate to the proper financing of the proj- 
ects; to the character of the benefits to be supplied; to the 
groups of persons to be included; to the distribution of 
costs, whether as between the teachers and the government 
or between the different classes of teachers; to the question 
whether participation should be optional or obligatory; and 
to the hands in which the management and control of the 
systems should be vested. 

Fundamental to the proper solution of all these questions 
is a clear recognition of what may be termed the actuarial 
basis of all pension systems. A satisfactory retirement 
system involves a promise to each person of the branch of 
service to which it is applied. The terms of the promise usu- 
ally vary according to the member's age, length of service, and 
salary received, not to speak of other special considerations 
which may be present. The annual and total amounts of the 
pension payments and the conditions under which they may be 
demanded are determined by varjang factors, the force of 
which cannot in all cases be exactly predetermined, but must 
be estimated upon the basis of averages. And, even starting 

35 



Teachers' Pension Systems in the United States 

from this basis, the mathematical calculations involved are such 
as only skilled actuaries are qualified to make. 

It is of course impossible to determine who or how many 
of the members embraced within the operation of any given 
pension system will withdraw from the service without ask- 
ing for or being entitled to a pension, or, having been 
awarded pensions, how long the recipients will continue 
to live and draw them. However, it is possible, upon the 
basis of approved mortality and actuarial tables, to determine 
with substantial exactness how many of a considerable num- 
ber of persons will qualify for an annuity, how many will 
die or resign or be dismissed under circumstances which 
will disqualify them from receiving a pension, and how 
many years those who are awarded pensions may be expected 
to live. Each person to whom the pension system applies 
represents a certain liability which, under the law of averages, 
can be determined, and, therefore, provision must be made 
for meeting it when it accrues, whether by the recipient's 
own periodical contributions or by proportionate grants from 
the state. Thus, it is necessary, in effect, if not in actual 
bookkeeping form, that both a debit and a credit account 
should be opened for each prospective annuitant, which ac- 
counts should be made to balance. In the "reserve," thus 
accumulated, lies the guarantee to a system's members that 
the promises made to them will be kept twenty, thirty or 
perhaps sixty or seventy years later. 

Under those systems which provide for contributions from 
the public purse, the extent of the liabilities assumed by the 
government at the time of the establishment of the system 
does not become fully manifest, or at any rate the amounts 
that must be annually paid do not reach their permanent 
level until sixty or seventy years later; for it is not until 
then that the total number of pensioners reaches the level 
at which deaths may be expected to equal the new acces- 
sions of each year. Thus, when a government gives its 

36 



Teachers' Pension Problem Outlined 

support to a newly established retirement system, it 
is necessary that it should foresee and make provision 
for meeting the liabilities that will accrue a generation later, in 
much the same way that when it creates a bonded indebted- 
ness it is necessary to make provision for the time when 
the bonds will mature and become payable. 

Groups of Persons to be Included. The personnel of a 
school system consists of various groups of employees : super- 
intendents, supervisors, principals, rank and file teachers, teach- 
er-clerks, janitors, and laborers. When the establishment of a 
pension system in a particular school system is considered, the 
question arises : Shall it apply to teachers or shall it also allow 
other groups to come in ? Opinions may differ on this question. 

The teachers may take the stand that the state or the city 
need not assist the fortunate ones who receive higher wages 
and who might, therefore, take care of themselves, but should 
increase its generosity to the lower paid. They may also claim 
that they deserve a pension system because of the intellectual 
character of the work they perform, and that the school em- 
ployees who perform inferior work do not deserve to be in- 
cluded. 

Others, and especially the school authorities, may take 
a different view. They may argue that the higher paid 
employees are no less improvident than the lower paid and 
are in no less need of protection, and, on the other hand 
that the duties performed by the lower classes of school em- 
ployees are public duties as well and that the efficiency of 
the schools may be considerably affected if these employees 
are not covered by the pension system, with the result that dead 
wood is allowed to accumulate among them. 

The question whether or not a particular class of school em- 
ployees should be included in a pension system cannot be settled 
by a mere comparison of their duties and salaries with those 
of the rank and file teachers. It must be settled on grounds 
of principle and expediency. The same principle applies 

Z7 



Teachers' Pension Systems in the United States 

to all classes of employees — it is their protection on one 
hand, and efficiency of service on the other. The questions 
thus arise : Is it desirable from the points of view of the 
employees, of the employer and of the public, that a pension 
system protecting the particular class of employees be estab- 
lished? Is it desirable from the point of view of efficiency 
that a system eliminating dead wood be introduced in the 
particular service? Is the establishment of such a system 
under certain circumstances and at that particular time ex- 
pedient and practicable? 

In the development of pension legislation the tendency 
has been towards a steady extension of the pension system 
to all classes of the school personnel. This tendency may 
be illustrated by the histories of the New Jersey and New 
York City Teachers' Retirement Funds. 

The New Jersey fund was established in 1896 and was 
to apply to "teachers in public schools." Three years later 
an amendment of the law was enacted which interpreted 
this term as meaning — 

Teachers, principals and supervising principals in public 
schools or in any reformatory or normal school or in any 
school supported either wholly or partially by public moneys 
raised under the authority of any law of this state. 

The amendment of 1902 included superintendents among 
the beneficiaries of the fund, and the amendment of 1906 
further broadened the application of the system by including 
under the term "teachers" all city, county or state superin- 
tendents, and also teacher-clerks and supervisors. 

The broadening of the scope of the New York City fund was 
similar to that of the New Jersey fund. After the fund was 
established in 1894, the amendments of 1902, 1905, and other 
amendments have brought under the system various classes 
of teachers and administrative officers who had not before 
been provided for, until at the present time the list of bene- 
ficiaries included under the term "teachers" is exceedingly 
long as may be seen from the following: 

38 



Teachers' Pension Problem Outlined 

'Teacher' shall mean the city superintendent of schools, 
the associate city superintendents, the district superintend- 
ents, the director and the assistant director of the division 
of reference and research, the director and the assistant 
directors of the bureau of compulsory education, school 
census and child welfare, the members of the board of ex- 
aminers, the directors and the assistant directors of special 
branches, the supervisor and the assistant supervisors of 
lectures, all principals, vice-principals, assistants-to-principals, 
heads of departments, and all regular and special teachers 
of the public day schools of the city of New York, and all 
employees of the board of education appointed to regular 
positions in the services of the public schools at annual 
salaries and whose appointments were made or shall here- 
after be made from eligible lists prepared as the result of 
examinations held by the board of examiners of the depart- 
ment of education/ 

The new system of the state of Pennsylvania has gone 
still further along this line. It was originally devised to 
include only teachers. As other school employees demanded 
to be included in the system, the bill was amended so as 
to include — 

any clerk, stenographer, janitor, attendance officer, or other 
person engaged in any work concerning or relating to the 
public schools of this commonwealth. 

At the same time the name of the system was changed from 
a Teachers' Retirement System to a Public School Employees 
Retirement System. In all cases of doubt the retirement 
board was empowered to determine whether the person is 
an "employee" as defined in the act. The term "public 
schools" is interpreted as — 

any class school, high school, normal school, training 
school, vocational school, truant school, parental school or 
any or all classes of schools within the State of Pennsyl- 
vania conducted under the order and superintendence of the 
Department of Public Instruction of the Commonwealth of 
Pennsylvania and of a duly elected or appointed board of 
public education, board of school directors or board of trust- 

^Civil Service employees connected with the school system are not elig- 
ible to membership in the fund. 

39 



Teachers' Pension Systems in the United States 

ees of the Commonwealth or of any school district or normal 
school district thereof and shall include the offices of the 
State Department of Public Instruction and the State Board 
of Education. 

In the states and cities in which pension systems have only 
recently been established, this tendency to extend pension 
benefits to classes of the school personnel not previously pro- 
vided for has as yet not appeared, but its early development 
there, too, may be expected. 

Extension of Systems to Contingencies other than Super- 
annuation. The desire to make a provision for old age is 
almost invariably the primary and quite frequently the 
sole object had in view in the establishment of a pension sys- 
tem. It is urged by the employees, especially the old em- 
ployees, who usually are most interested in the establishment 
of the system, as the main contingency which should be pro- 
vided for. It is urged by the employer as the most important 
provision from the point of view of efficiency of service. 

In a broader view of the problem, the retirement plan 
should provide benefits to a large part or all of the members 
of the school system. It should deal with the contingencies 
not only of superannuation and of disability after long serv- 
ice, but of death, of disability at any time, and of resignation 
and dismissal. 

On account of the short period in which teachers' pen- 
sion funds have been in operation in the United States, 
the scope of their provisions is rather limited. The princi- 
pal objects are, naturally, the retirement of the superannuated 
and the disabled. Of the twenty-four systems discussed in 
the latter part of this volume, only those of Maine and 
Pittsburgh, and the State Pension System of New Jersey 
restrict their benefits to superannuated teachers. The other 
twenty-one systems provide "disability" pensions after various 
minimum terms of service, in addition to "superannuation" 
or "service" pensions. 

40 



Teachers' Pension Problem Outlined 

The contingencies of death, resignation and dismissal are 
inadequately^ considered or not considered at all in the 
majority of the existing systems. Of the nineteen contrib- 
utory systems discussed, only Massachusetts and the new 
systems of New York City, Pennsylvania and Connecticut 
refund all contributions with interest in case of resigna- 
tion, dismissal or death, or provide certain optional benefits. 
Ten systems refund one-half of all the contributions but 
without interest in case of resignation, seven do it in case 
of dismissal, and only four return one-half of all the con- 
tributions but without interest to dependents in the event of 
death. Three systems including the New Jersey Retirement 
Fund, and the California and Virginia systems ofifer no re- 
funds in any event. 

A great obstacle to the inclusion in the existing systems 
of provisions against other contingencies than superannua- 
tion and disability is the fact that the contributions provided 
in the existing systems, as later shown, are utterly inadequate to 
support even the limited scope of benefits now provided. Before 
the scope of benefits of the majority of the existing systems 
can be broadened, steps must therefore be taken to reorganize 
these systems on an adequate and permanent financial basis. 
Such a reorganization will inevitably involve also a recogni- 
tion of the importance of the contingencies of death, resig- 
nation and dismissal, and the introduction of new benefits, 
which will be adjusted according to the importance of the 
contingencies, and also according to the cost involved in 
providing against them. 

Conditions under which Benefits Should be Granted. 
The several contingencies against which the system is to pro- 
vide having been determined upon from a consideration of 
both the needs of the service and the approximate income 
to be anticipated for the fund, there remain to be determined 
the exact conditions under which the benefits corresponding 

41 



Teachers' Pension Systems in the United States 

to each contingency are to be granted. As to each of these 
benefits there arise special problems. 

Superannuation Benefit. Superannuation, that is, inca- 
pacity caused by old age, does not come suddenly. It is 
difficult to detect the exact time when the teacher or any 
other employee has become incapacitated for further effi- 
cient teaching or the performance of other services. In 
view of this difficulty a pension system cannot leave it to 
the discretion of a superior officer to decide when the teacher 
or other employee is superannuated. The system must fix 
certain minimum conditions after fulfilling which the old 
employee shall be allowed to retire on a pension whenever 
he feels himself incapacitated. The employees are interested 
in having these conditions so fixed that they shall not be 
tied to the service beyond the time of exhaustion. The 
employer urges that the conditions be fixed neither too low 
nor too high, so that he will neither lose the services of 
efficient employees through premature retirement nor be 
burdened with dead wood which should be eliminated. Public 
interest requires that every individual should work as long 
as he is capable of rendering service and should retire from 
work, without being exposed to want, when he is no longer 
efficient. 

The practical reconciliation of these conflicting require- 
ments is not easily effected. Opinions may differ as to 
whether age or long service, or both combined, furnish the 
most accurate index of superannuation. Furthermore, dif- 
ferent opinions may exist as to the exact minimum age and 
minimum length of service which should be adopted. Some 
urge that a teacher sixty years of age is too old to continue 
teaching; others that at that age a teacher is usually still 
capable of teaching and that the age of sixty-five is more 
appropriate. Still others contend that a teacher who has 
taught for thirty years is usually worn out though he may 
be only fifty years of age; while others may maintain that 

42 



Teachers' Pension Problem Outlined 

thirty years of service is too low, and that thirty-five or 
even forty years should be adopted. 

In this conflict of opinion a satisfactory solution of the 
problem of fixing the conditions of superannuation can be 
obtained only if a thorough investigation is made of the 
hazards of the occupation, the average conditions un- 
der which superannuation takes place in the particular 
service, the special requirements of efficiency, and the dif- 
ferences in cost of the benefits which will result from adopting 
one or the other age requirement or length of service con- 
dition. 

Disability. Tlie problem of premature disability is not 
generally appreciated in the working out of pension systems. 
The old employees are past its dangers. The young em- 
ployees feeling themselves in full vigor seldom realize that 
disability may strike them at any moment. The superior 
officers or the employers do not appreciate the importance of 
a provision for disability so much as they do that for old age, 
because the cases of early disability are less frequent, and 
the connection with the service in the case of a young em- 
ployee who becomes incapacitated is usually less strong and 
less intimate. And yet the hardship which premature dis- 
ability may cause when one is young may be far greater 
than if incapacity comes in old age when one's children, if 
there are any, are grown and the responsibilities correspond- 
ingly lighter. Cases may arise where without such provision 
it would be exceedingly difficult to separate the disabled 
employee from the service and where considerable harm to 
efficiency would result. Slowly, therefore, the great im- 
portance of disability provisions is coming to be understood. 

With regard to conditions under which benefits in case 
of disability should be offered, the question arises whether 
pensions shall be paid without regard to the length of service 
of the disabled employee, or whether they shall be paid only 
in cases where the disabled employee has been connected 

43 



Teachers' Pension Systems in the United States 

with the service for a certain period of time. It may be 
highly desirable from the standpoint of the employee's interest 
that adequate protection against disability should be pro- 
vided regardless of length of service, because disability may 
come at any time; and yet, from the employer's point of 
view, there may be no justification for his contributing to 
the pension of an employee who has but recently joined his 
service, and perhaps was not in sound physical health when 
he entered the service. 

As a practical expedient under such conditions, it may 
be proposed that the provision for disabilities, taking place be- 
fore a certain length of service, may be entirely at the ex- 
pense of the employees affected, either through coopera- 
tive insurance or individual saving, and that only for cases 
of disability after that period shall a pension be provided, 
in the cost of which the employer participates. If this be 
done, the question presents itself : What shall this minimum 
period be? Shall it be for ten, fifteen or twenty years? In 
deciding this question the framers of the system must con- 
sider not only the protection of the employees, the good of 
the service, and the public interest in the disability problem, 
but also the cost involved in disability benefits offered. 

There are also other problems of disability conditions which 
cannot be neglected. These pertain to the administrative 
aspects of disability benefits, such as medical examinations, 
periodical reexaminations, and the revocation of benefits on 
termination of disability. 

Death Benefits. Provisions for dependents in case of 
death may be highly desirable from the point of view of 
the men teachers who usually have family responsibilities 
and are unable to purchase a sufficient amount of insurance 
in an ordinary way and at the ordinary prices. Women 
teachers who usually are unmarried may be indifferent to 
this class of benefits, or they may even oppose their inclusion 
in the system, on the ground that death benefits being ex- 

44 



Teachers' Pension Problem Outlined 

eluded their contributions could be reduced or their super- 
annuation benefits increased. 

The city or state may take the view that death automat- 
ically releases the teacher from the service and that the 
problem of dependents is a private matter in which it is 
not concerned; or it may take the opposite view and decide 
that it would stabilize and increase the efficiency of the per- 
sonnel and attract to the service a better type of teacher 
if the system were to offer protection against the gravest 
contingency of life, against which protection is most fre- 
quently sought. 

A multiplicity of questions arise in considering the con- 
ditions under which death benefits should be provided. A 
minimum period of service may be advocated, after which, 
in case of death, a benefit should be offered to dependents 
partly at the expense of the employer. The difference in 
economic status as well as in relation to the service between 
an active employee and a pensioner may be emphasized and 
different benefits suggested according as death takes place 
before or after retirement. The difference between the eco- 
nomic conditions of different individuals may be pointed to 
and various optional benefits advocated. For an intelligent 
decision of these various questions actuarial estimates of 
the cost of various death benefits must be prepared, for it 
may be found that what would be highly desirable would be 
too costly. 

WitJidmzval Benefits. The framers of the system may 
find that considerable differences of opinion exist among em- 
ployees and employers as to the conditions under which with- 
drawal benefits, to be paid in case of resignation or dismissal, 
should be offered. Some employees, most probably the older 
ones, may take the view that these benefits should be given 
only after the employee has been connected with the service 
for a certain period of years, which may be variously esti- 
mated at two, five, ten or even a greater number of years. On 

45 



Teachers' Pension Systems in the United States 

the other hand the younger employees will be better satisfied 
if their contributions are returned to them in case of resigna- 
tion or dismissal, regardless of length of service. 

The government on its side may seek to stabilize the 
teaching force by holding over the heads of the teachers 
the constant threat that should they resign or be dismissed 
they will forfeit all their pension rights and also all their 
contributions. On the other hand, it may decide in favor 
of withdrawal benefits if it finds that in absence of such 
benefits the service would become overburdened with in- 
efficient teachers who would neither resign, fearing to lose 
their pension rights and contributions, nor be dismissed by 
their superiors, who would not wish to inflict upon them the 
heavy punishment of forfeiture of their contributions. 

A decision on this point is far-reaching in its effect. It 
may affect the condition not only in the particular service, 
city or state, but also in other services and places. With- 
drawal benefits offered upon leaving the service at any time 
or some arrangement for transferring the teacher's contri- 
butions or crediting him with them at his new place of 
employment will facilitate a free migration of teachers. A 
restricting condition imposed upon these benefits will act 
as a check against this migration. From this point of view 
the effect of one or the other provision would be good or 
bad according to whether migration and interchange of 
teachers between schools is regarded as desirable as a means 
of broadening the experience of teachers and raising the 
educational standards of the schools throughout the coun- 
try, or whether a greater stability of the teaching personnel 
is deemed necessary. If the latter end is sought the analysis 
must be carried further: it must be ascertained whether for- 
feiture of contributions would prevent the more able among 
the teachers, rather than the less able, from leaving the 
service. 

Finally, the question must be considered whether or not 
46 



Teachers' Pension Problem Outlined 

it is just that an individual who happens to leave a particular 
service after a comparatively short space of time should for- 
feit all the contributions which he made during the past 
years and should begin anew in his effort to provide against 
old age, death, etc. 

Amount of Benefits. The problem of fixing the amount of 
benefits to be provided is probably the most complicated 
one among those faced by the framers of a system. The 
employees, on the one side, seek to obtain greater benefits; 
the employer, on the other hand, seeks to obtain the desired 
results with smaller benefits. The highly paid employees are 
interested in benefits proportionate to their high salaries, 
whereas the low paid often favor the reduction of the high 
benefits at the top of the scale in order to make possible the 
payment of higher benefits at the bottom of the scale and the 
establishment in this way of one uniform benefit of a flat 
amount according to the average need. The employer may 
be inclined toward graduating benefits according to salary 
and length of service. If the latter principle is adopted, 
opinions may differ as to whether the salary of the last year 
or an average throughout a period of years should be taken as 
a basis for the computation of the benefit, and what the period 
for this average should be. Objections may be raised to the 
adoption of the salary basis on the ground that contributions 
would be calculated according to average advancement and 
that the employee who advances more rapidly than the aver- 
age would receive a greater benefit than he has been paying 
for; whereas the employee who advances more slowly would 
receive less than what he has been paying for. Finally, differ- 
ences of opinion may arise as to the exact amount of the 
benefit or the exact proportion which it shall have to the salary. 
In deciding these questions, the framers of the system 
must have before them actuarial estimates of the cost of 
various benefits proposed. They must consider the economic 

47 



Teachers' Pension Systems in the United States 

needs of the employees with the view of making the benefits 
adequate but not extravagant. They must consider the 
dictates of efficient service, which require that the benefits 
should increase either directly or indirectly in accordance 
with longer service, so as to induce an employee to continue 
in service after he has completed the minimum require- 
ments and until he feels that he can no longer efficiently 
perform his duties. They must also determine whether 
or not a minimum and maximum benefit for the lowest and 
highest salaried men would be desirable. 

With regard to the disability benefit, the framers of the 
system must consider the difference in the economic situation 
of the disabled employee as compared with that of the super- 
annuated, as well as the fact that the total amount contributed 
before disability occurs is usually smaller and the cost not 
the same because of the different ages and rates of mor- 
tality. In accordance with these considerations it may be 
necessary to fix the benefits at a rate somewhat different from 
that for superannuation, and further adjustments may be 
necessary in cases where disability almost merges with super- 
annuation. 

The fixing of the amount of withdrawal benefits presents 
a comparatively simple problem since it is usually solved by 
returning to the employee the contributions which he has 
made, either with or without interest compounded thereon. 

Division of Cost between Employer and Employees. 

After the framers of a system have decided on the benefits 
which the system shall provide, have had prepared actuarial 
estimates of the obligations under these benefits and of the 
cost of the system, and have determined the general method 
of meeting the financial obligations, they are ready to take 
up with the employer and the employees the question as to 
who shall bear the cost of the system and how the cost shall 
be divided. 

The framers of the system usually find that this ques- 

48 



Teachers' Pension Problem Outlined 

tion arouses a heated discussion. On one side are the advocates 
of the "wholly contributory" idea, according to which the 
system should be supported entirely by dues from the em- 
ployees themselves. On the other side are the exponents 
of the "non-contributory" idea, who claim that the employees 
should not be required to contribute and that the system 
should be operated entirely at the expense of the employer. 
Between the two camps are those who favor a compromise, 
according to which the cost will be borne jointly by the 
employees and the employer and known as "partly or jointly 
contributory." 

The employer may urge the framers of a pension system 
to adopt the wholly contributory basis because then he would 
not need to contribute to the system. A group of employees 
may advocate its adoption believing that it will assure them 
greater control over their fund and benefits. 

Another group of employees may strongly object to the 
adoption of such a basis. They may argue that it would 
be unfair to charge them with the entire cost of a system 
which benefits the employer to a considerable extent. An 
economist may argue that it will result in the eventual 
shifting of a part or all of the cost on the employer in the 
form of an increase of wages which will have to be granted 
on that account, and that the system^ will eventually change 
to the partly contributory or non-contributory basis. If the 
argument is urged that the contributions required will be too 
great in proportion to the salaries from which they are to 
be deducted, the answer may be advanced that the salaries 
should be increased so as to enable the employees to make 
these contributions; and that if this solution can not be 
applied to the employees already in the service it can at 
least be applied to new entrants. 

The old employees usually urge the adoption of a non-con- 
tributory basis for they claim a pension as a gratuity in rec- 
ognition of long and faithful service. The young employees 

49 



Teachers' Pension Systems in the United States 

may support them in this demand, but for a different rea- 
son: they want their entire salary for the satisfaction of 
their immediate wants and care httle to set aside anything 
for the contingencies of a future which they believe to be 
remote. The employer may favor the idea of a gratuitous 
pension because it permits him to exercise a greater control 
over his employees, to include in the system only such bene- 
fits as he desires to give, and to exclude the employees from 
management of the system. 

On the other hand, the more independent employees may 
fear that a non-contributory system will curtail their freedom ; 
they may object to it because it usually does not offer with- 
drawal benefits and give the employees a voice in the man- 
agement. They prefer a system in which their interests 
and desires will be considered equally with those of the 
employer and in the control of which they will participate. 
They want other benefits than those usually provided by a 
non-contributory system and they are willing to pay for 
them. 

Economists may differ in their opinion on this point. Some 
may argue that it makes no difference in the long run which 
basis is adopted, that the incidence of cost will eventually fall 
upon the employees; that since the employer will depress 
salaries on account of the pensions he pays, a non-contrib- 
utory system will become "contributory" in a disguised 
form, and the "gratuity" will change into "deferred pay- 
ments" and become a part of the compensation. Other 
economists may argue that it will make a considerable dif- 
ference which basis is adopted because it will differently 
affect various groups among the employees; the older em- 
ployees will retire before the depressing forces fully develop 
and affect their wages; the younger generation will be far 
more exposed to these forces and will have to pay for the 
benefits of the older, besides paying for their own prospec- 
tive benefits. 

50 



Teachers' Pension Problem Outlined 

The employer may take the practical view that while it may 
be theoretically correct that eventually a part of his burden 
on account of a non-contributory S3^stem will be shifted upon 
the employees, in the meanwhile he will have to bear the 
entire burden. If he has been furnished with an actuarial 
estimate of cost involved he may find that the burden will be 
too great for him to bear alone. 

The actuary may find from experience that the non-con- 
tributory basis is ill adapted to the establishment of a sound 
actuarial system, because the employer will sacrifice the 
actuarial soundness of the system rather than pay the high 
contributions which will be required. 

The public which promotes voluntary and compulsory sav- 
ings among its members may object to the establishment of 
a non-contributory system on the ground that it absolves a 
group of wage-earners from any obligation to save; will 
be harmful to the individual as well as society at large; 
will lead to the establishment of similar gratuitous benefits 
for other wage-earners, and block the spreading of the 
social insurance movement. 

Lastly, a group of employees and the employer may agree 
to contribute jointly to the system, and yet they may widely 
disagree as to how the cost shall be divided. Each side 
may claim that the other will benefit from the establish- 
ment of the system more than the other and should, there- 
fore, bear the major part of the cost. Some employees may 
agree to a deduction from their salary of i per cent but 
oppose any greater deduction, leaving it to the employer 
to supply the balance of lo or ii per cent or more. Others 
may agree to a contribution of 2 or 3 per cent, but object 
to a higher contribution on the ground that it will be equiva- 
lent to a reduction of wages. On the other hand, the em- 
ployer may believe that the employees can well afford to 
contribute 8 per cent or even more and that a contribution on 
his part of 3 or 4 per cent will be sufficiently generous. 

51 



Teachers' Pension Systems in the United States 

It may be suggested that the employer contribute each 
year a uniform percentage of salary on account of all em- 
ployees, or that he match the contribution of every em- 
ployee, or that he contribute only on account of that number 
of employees who, according to actuarial estimates, will 
apply for retirement. Different methods of contributing 
may be suggested for creating a reserve against the accrued 
liabilities. It may be proposed that the employer create 
this reserve by means of equal annual instalments of a cer- 
tain amount during a certain period of years. Opinions may 
differ as to whether that period shall be fixed at one hun- 
dred, sixty, forty or a less number of years. From the point 
of view of stability of the system it may be highly desirable 
to liquidate the deficiency within a short space of time. From 
the point of view of the employer, considering other ex- 
penditures, it may be desirable to spread the deficiency over 
a longer period and make the annual contribution smaller. 

The entire controversy may thus develop into one of 
bargaining between the two sides. The employees who 
insist on paying less than 3 per cent may offer to pay i 
per cent more on the condition that the retirement age be 
lowered a few years or changed to straight service retire- 
ment, or that the scale of benefits be increased, or the bene- 
fits of higher paid employees reduced, or the proposed system 
changed in some other respect. The most vital parts of 
a carefully worked out system may suddenly have to be 
sacrificed and replaced by less sound provisions for the sake of 
effecting a bargain. 

In view of this wide range of opinion and danger of 
failing because of the inability to agree on the matter of 
contributions, the task of dividing the cost of a system be- 
tween employer and employees becomes exceedingly diffi- 
cult. If the framers of a system have constructed the entire 
system so as to benefit the employer and employees in a 
more or less equal measure, then they must also divide the 

52 



Teachers' Pension Problem Outlined 

cost of benefits more or less equally between them. They 
must not only follow the fundamental idea, but also be able 
to impress it upon the employer and the employees. 

At the same time they must consider what exceptions to 
the principle — "division of cost according to benefits de- 
rived" — will be necessary. They must decide what will be 
the maximum amount or percentage of salary which can 
be exacted from the employees without depriving them of 
the necessaries of life. They may find that in the case of 
new entrants, except those entering at older ages, the con- 
tributions required will be below the estimated maximum, 
and equal division of cost between employer and employees 
will be entirely feasible, but that in the case of the employees 
already in the service at the time of establishment of the 
system and older entrants it will not be feasible because 
the contributions required will be so high as to constitute 
for the employees too great a hardship. 

The division of the cost of benefits for services rendered 
prior to the establishment of the system must be considered 
separately from that of the benefits for future services. The 
framers of the system may find that it will not be possible 
to divide equally between employer and employees the pay- 
ment of back contributions on account of prior years, be- 
cause it will impose upon the employees an impossible bur- 
den, and that the employer should cover the major part or 
even the entire deficiency; but that it will be entirely feasible 
to divide equally the cost of benefits for future services. 

The problem of the lowest salaried employees may be 
different in certain aspects from that of other classes. 
Social and other considerations may require that in their case 
the employer undertake the major part of the cost of their 
benefits. 

Contributions of Individual Members. The distribution 
of the cost of benefits among the members of the system — that 

53 



Teachers' Pension Systems in the United States 

is, the fixing of the contributions of the individuals — is also a 
highly complicated and technical problem. It forms an im- 
portant part of the work of the actuary. The framers of the 
system must take into account the different mortality of men 
and women employees; the different periods during which 
entrants of various ages will contribute; the different periods 
of prior service which the employees already in the service 
have to their credit at the time of establishment of the system; 
the differences in compensation between the higher and lower 
salaried employees; the different rates of salary advancement 
between various employees. Unless all these differences are 
properly reflected in the cost of the benefits, accusations may 
be made that the framers of the system are taxing men in 
favor of the women, or vice versa, or making the younger 
employees contribute for the benefit of the older, or giving 
higher salaried employees benefits at the expense of the lower 
paid, and taxing those who advance more slowly in favor of 
those who advance more rapidly. Because of a failure to 
recognize some of these differences the system may meet with 
opposition from one or the other group of employees and its 
establishment may be seriously hampered. 

Compulsory Participation. After the various phases of 
the question of contributions have been decided, the framers 
of the system are in a better position to effect an agreement 
between the employer and employees on the very debatable 
question: Shall participation in the system be made com- 
pulsory or voluntary for the employees? 

Many important considerations may urge the establishment 
of a compulsory feature. It may be imperative from the 
point of view of efficiency of service that the system be made 
compulsory, because the failure of some employees to join 
the system may cause considerable harm to efficiency of ser- 
vice in case they become superannuated or disabled. The 
interests of the employees may require that they be com- 

54 



Teachers' Pension Problem Outlined 

pelled to join the system and be protected against their own 
improvidence. PubHc interest may demand that the wage- 
earners be compelled to save and that the society be pro- 
tected against the individual becoming a public charge. It 
may be essential to the financial stability of the system that 
membership in it be made compulsory as otherwise only a 
few employees, mostly the older ones, might join and the 
system be more exposed to accidental variations in the rates 
of mortality and withdrawal. 

On the other hand, reasons may be advanced against com- 
pulsion. The employees may object to any one dictating to 
them what is for their own good. They may claim that 
participation in the system was not included in their orig- 
inal contract of employment and that the compulsion would 
be a violation of their contractual rights. The opposition 
may be entirely unjustified, and yet, in order not to jeopardize 
the system, its framers may have to abandon the idea of 
introducing compulsion for present employees and to apply 
it only to new entrants, because in the latter case the claim 
to contractual rights could not be raised. 

Along with its advantages the framers of the system must 
consider certain disadvantages of the compulsory feature : 
the contribution is deducted from the employee's salary and 
becomes entirely automatic, it requires no effort on his part, 
and in the course of time he may lose interest in his pro- 
tection. In view of this fact it may be found desirable 
to combine in a proper measure the compulsory and volun- 
tary features; to make compulsory certain minimum con- 
tributions and the discharge of certain minimum obliga- 
tions, but leave optional higher contributions and the dis- 
charge of higher obligations. 

Right to Management. After all the foregoing questions 
have been decided the system is almost completed. It remains 
only to determine by whom it shall be managed. The crea- 
tion of a special body for its management will usually be 

55 



Teachers' Pension Systems in the United States 

suggested, and the problem will be to decide how that body 
shall be constituted. The employees may contend that they 
should control the system and that the members of the retire- 
ment board should be elected by them. The employer may 
desire to keep the entire control over the system in his own 
hands. It may be suggested as a compromise that the control 
be divided. Then each side may claim that it should have a 
majority representation in the board. 

Following the fundamental idea of the system, its 
framers must divide between the two sides the responsibility 
for the safe management of the system in the same measure 
as the benefits and costs have been divided between them. 
They must divide the control over the system in such a way 
as to safeguard the interests of both sides and effect a settle- 
ment between them. 

Securing Enactment of the System. After the system 
has thus been completed the problem is presented of securing 
its enactment. While a few leaders among the teachers, a 
few superior officers of the state or local educational system, 
and a few legislators have perhaps followed its preparation 
with a great deal of interest, the great mass of the teachers, 
most of the higher educational officers, and most of the legis- 
lators and the public at large have not been advised in the 
matter. Their attention will be drawn to it only when a bill 
is actually introduced in the legislature. The framers of 
the system must satisfy their interests in the matter and be 
prepared to meet all objections that may arise. They must 
have a report carefully prepared explaining the conditions 
which call for the establishment of the system and setting 
forth its fundamental principles and advantages to the schools, 
the teachers, and the public at large. Unless this is done a 
powerful opposition may suddenly develop which will defeat 
the bill and prevent the establishment of the system. 



56 



CHAPTER III 

SUPERANNUATION BENEFITS 

The object generally first considered in establishing a re- 
tirement system is the release from service of those who, 
because of advanced age, can no longer teach eiTectively. 
The arguments for retirement with financial support in such 
cases are especially strong because, as a rule, a long and faith- 
ful service can be pointed to. 

Eligibility for Superannuation Benefits. While the jus- 
tice and the desirability of superannuation provisions are ap- 
parent, great dif^culty is experienced in determining the condi- 
tions of eligibility. A primitive method of dealing with this 
problem was to require of the teacher a "proof of incapacity." 
The method is patently defective, because of the dif^culty of 
detecting and positively determining the time when the slow 
deterioration of the teacher's physical and mental powers has 
so far advanced as to incapacitate him for further service. 
The shortcomings of the method have thus been so apparent 
as to result in its general abandonment in this country and 
abroad. The only system in this country which still applies 
it is the New Jersey Teachers' Retirement Fund.^ In its place 
have come methods which base eligibility for retirement upon 
length of service, or upon age, or upon both combined. 

The method which takes into consideration only length 
of service is based on the view that teaching is a particularly 
exhausting occupation, and that a certain number of years 
of service exhausts a teacher regardless of age. This con- 
tention has never been reduced to a definite statement by 

'This fund has practically ceased to operate with the enactment on 
April ID, 1919 of a new retirement system, which is discussed in Chapter 
XVIII. 

57 



Teachers' Pension Systems in the United States 

any scientific investigation. From the nature of the case, 
the decision as to the term which is presumed to render the 
average teacher "service exhausted'' must necessarily be arbi- 
trary ; in some systems it is fixed at twenty, in others at twenty- 
five or thirty, in still others at thirty-five or forty, and in some 
even at forty-five years. Experience shows, however, that 
no service period is a positive indication of superannuation 
and that an early entrant may complete the required period of 
service while still in the prime of life, whereas a late en- 
trant may complete it only late in life and perhaps only 
long after he has become superannuated. 

A far more desirable method is to fix a retirement age, 
on the attainment of which a teacher may be pensioned, on 
demand, without submitting to medical examination. The 
advantage of this method lies in the fact that it is as effective 
in the case of late entrants as it is in the case of early en- 
trants. It offers a good basis for determining superannua- 
tion, provided the age is fixed after a careful investigation of 
the occupational hazards and of the requirements of efficiency 
in the particular service. 

Some plans combine the "age" and "length of service" 
methods and grant pensions upon the applicants fulfilling 
either a minimum age or service condition, or both. The 
advantages or disadvantages of this method depend on the 
exact age and service terms adopted and whether one or the 
other factor predominates. 

Credit for Outside Service. In the application of the age 
and service requirements in any pension plan to a service 
which is partly recruited from persons who have had service 
in other jurisdictions, a serious difficulty arises in determining 
the extent to which allowance shall be made for such service. 
In the teaching service this complication is always present, 
as it is considered advantageous to encourage the employment 
of teachers who have had a number of years of special experi- 
ence elsewhere, while the prospect of a protected old age holds 

58 



Superannuation Benefits 

out a strong inducement to the teachers themselves to make a 
change, if they are employed in a system in which unsatis- 
factory retirement provisions exist. When such teachers 
after a relatively short term of service become superannuated, 
the question of their release on an adequate pension presents 
considerable difficulty. It is frequently regarded as necessary 
to credit them, not only as respects eligibility to retirement 
but also as respects the amount of pension, with at least a 
part of the services rendered outside of the system. In doing 
this, however, a portion of the pension is paid by the retiring 
authority for services from which it has benefited only indi- 
rectly. 

The question of cost is adjusted by either requiring back 
contributions from the teacher for the years of prior service 
credited for pension with the government supplying the re- 
maining part, or by placing the entire cost upon the teacher, 
or by placing it all upon the government. This inequitable bur- 
den could be avoided by the interchange of appropriate amounts 
representing the worth of pension earned by a teacher trans- 
ferred from one educational system to another. An example 
of such arrangement is offered by the recently established 
pension system of federated universities in Great Britain. 
It is possible that a similar practice will be established in the 
United States when the theory of teachers' pensions has 
had time to develop and existing pension systems have been 
reorganized on a more uniform and business-like basis. How- 
ever, the fact must not be overlooked that our peculiar state 
organization of government might present some serious ob- 
stacles to the adoption of such an arrangement : the transfer 
of state funds as between different states would be something 
almost entirely new in our governmental practice. 

Methods Used in Typical Systems. Of the twenty-four 
state and local pension systems analyzed in the second part 
of this volume, only two — the Massachusetts system and the 
Pennsylvania system — make the teacher's age the deciding 

59 



Teachers' Pension Systems in the United States 

factor for eligibility to pension. Ten systems on the other 
hand disregard the teacher's age and make his claim to a 
pension dependent on the number of years served. The mini- 
mum length of service, entitling teachers in these systems to 
retirement, ranges from twenty to forty years as follows: 
Minnesota and Wisconsin, 20 years; Michigan, Chicago and 
Pittsburgh, 25 years; California, Cleveland, Buffalo and Bos- 
ton Retirement Fund, 30 years; Baltimore, 40 years. In 
Bufifalo, men are required to serve five years longer than 
women, and may retire only after 35 years of service. 

A combination of minimum age and service requirements 
for eligibility to retirement is provided in the following 
systems : 

State or City Age Service 

Illinois 50 25 years 

Virginia 50 (58 for men) 30 " 

Denver 55 (60 for men) 25 " 

Maine 60 25 " 

Philadelphia 60 30 " 

Boston Permanent Fund 65 10 " 

Five systems have alternative conditions of eligibility to 
pension on application. In three of them teachers may retire 
upon completing a fixed period of service, or, having reached 
a minimum age, may have a less number of teaching years 
to their credit as follows: Connecticut, 35 years' service 
or 15 years' service and age 60; New York State, 35 years' 
service or 2^ years' service and age 60; New Jersey State 
Pension, 35 years' service with 25 in the state, or last 20 
years' service in state and age 70, or 32 years' service and 
age 75. The two other systems with alternative retirement 
conditions are those of New Orleans and New York City; 
in which age 65 or a service of 30 years in New Orleans 
and 35 years in New York City is required for eligibility 
to retirement on demand. 

The New York State system gives the pension board the 
right to retire, in its discretion, teachers who have completed 
25 years of service. Realizing that such provision, if not 

60 



Superannuation Benefits 

properly safeguarded, might result in premature retirement 
of teachers in good health, the board has adopted the follow- 
ing restrictive resolution : 

Resolved, that generally it shall be the attitude of the State 
Teachers' Retirement Board to approve the claims of all 
applicants who have taught in the public schools, as provided 
by the retirement law, for 35 years or more, or who have 
rendered such service for at least 25 years and have reached 
the age of 60 or more years. 

All the systems under discussion, with the exception of 
those of Massachusetts, Connecticut, Pennsylvania, Virginia, 
Boston Permanent Fund and New Jersey Retirement Fund, 
make special provision for outside teaching experience by per- 
mitting a part of such service to be credited for pensions. 
These special allowances are by no means uniform, as may 
be seen from the table on the following page. 

Dangers of Premature Retirement. The principal lesson 
to be drawn from a review of the conditions of eligibility 
to pension in the twenty-four systems mentioned is the pos- 
sibility of premature retirement. The same criticism is ap- 
plicable to nearly all of the teachers' pension systems in the 
United States. In Minnesota, for instance, the twenty-year 
service provision places an income for life at the disposal 
of teachers, who, if they began teaching before they were 
20, are but from 35 to 40 years old. The eight systems 
permitting retirement after 25 or 30 years of service also 
afford an opportunity for rather early retirement, when it is 
considered that the majority of teachers enter the profes- 
sion at an early age. Where minimum age requirements 
are in force, 50 to 55 years is quite frequently considered 
the point of physical or mental exhaustion of the average 
teacher. 

That provisions of this nature work a loss to the school 
system of efficient and capable teachers is a reasonable con- 
clusion. A less important, but none the less practical, objec- 

61 



Teachers' Pension Systems in the United States 



Conditions for Superannuation Retirement 



Pension System 



Minimum Years of Service Entitling 
TO Superannuation Pension 



Within 

Jurisdiction 

of 

Retiring 

System 



Credited 

for 
"Outside" 

Ex- 
perience 



States; 

1. Illinois 

2. New York 

3. New Jersey Retirement Fund 

4. New Jersey State Pension 

5. Connecticut 

6. Minnesota 

7. Wisconsin 

8. California 

9. Virginia 

10. Michigan 

11. Maine 

12. Massachusetts 



13. Pennsylvania. 



Cities; 

1. New York City 

2. Chicago 

3. Philadelphia 

4. Cleveland 

5. Boston Permanent Fimd 

6. Boston Retirement Fimd 

7. Pittsburgh 

8. Baltimore 

9. Buffalo 

10. New Orleans 

11. Denver 



25 

25 

20 
(proof of 
incapacity) 

35 

35 

(or 60 yrs. 

of age) 

20 

25 

30 

30 

25 

25 
No mini- 
mum ser- 
vice; 60 
years of 

age 
No mini- 
mum ser- 
vice; 60 
years of 

age 

35 
25 
30 
30 
10 
30 
25 
40 
30 
(35 for men) 
30 
25 



25 
All 



15 
18 
15 
30 
15 
20 
All 



All 



20 
15 
20 
15 
10 
10 

12^ 
20 
24 
(28formen) 
10 
15 



10 
10 

None 



10 

None 



5 

7 

15 

None 

10 

5 

None 



None 



151 
10 
10 
15 
None 
20 

20 

6 

(7 for men) 

20 

10 



"i Fifteen years for new entrants. 
teachers. 



All outside service credited for present 



62 



Superannuation Benefits 

tion is the high cost of early retirements — a matter which 
is discussed in another section of this volume. 

Compulsory Retirement. Minimum service and age con- 
ditions for voluntary retirement deal only with one phase of 
the superannuation problem. The temptation to retire in the 
prime of life and, as often occurs, to supplement one's pension 
after retirement with a salary earned in another teaching 
system or in another occupation, gradually disappears with 
advancing age and reduced opportunity for outside employ- 
ment. The prospect of a half-pay pension and consequent 
necessity for substantial reduction in one's standard of living 
is no inducement for the aged teacher to retire. Especially 
is this true of married men teachers if they have families de- 
pendent upon their earnings. Consequently the tendency of 
the superannuated to remain in service beyond the period of 
usefulness can only be checked by means of compulsory retire- 
ment. 

The only effective method covering compulsory retirement 
is a mandatory provision in the law for the pensioning of 
teachers who have reached a maximum age limit. Such pro- 
vision exists in the Massachusetts, Connecticut, Pennsylvania 
and New York City systems, which automatically place in 
retirement all teachers who reach the age of 70 years. In 
none of the other systems under discussion does such a manda- 
tor}'- retirement provision exist. 

In many systems the law gives to the pensioning authorities 
the discretionary right to compel the retirement of teachers 
who have completed the minimum service and age conditions 
for pensions. The usual experience in pension administration 
is, however, that unless such rule is made explicit and manda- 
tory, it fails to be generally applied, if at all. 

Amount of Superannuation Benefit. Two conflicting 
considerations enter into the determination of the amount 
of pension to be granted a retiring teacher. On the one hand, 

63 



Teachers* Pension Systems in the United States 

limitation of resources requires that the allowance be reduced 
to the minimum, and be granted only late in life when its pay- 
ment will be made only during a short period. On the other 
hand, the effectiveness of a retirement system in inducing the 
superannuated to relinquish their active salaries depends to a 
great extent on the ability to offer reasonably high benefits. 

The cost of pensions has rarely been given due weight in 
establishing pension systems in this country. As a result, 
pensions, though small, are granted to teachers at such an 
early stage that their payment over a long period of life 
expectancy^ demands larger financial resources than have been 
provided or can conveniently be made available in the future. 
The amount of a pension has generally been fixed by prece- 
dent. Particularly is this true of the half-pay pension idea 
so generally accepted abroad in retirement plans for public 
employees, which was adopted in the United States in the 
first established pension systems and then imitated by those 
of more recent origin. 

While this principle is generally observed in teachers' retire- 
ment systems, with respect to the bulk of the personnel, im- 
portant differences exist in its application. Existing methods 
of fixing the amount of pension may be grouped in six classes. 
The first of these, the "savings" method, is not properly a 
pension plan at all. The simplest pension method is that which 
fixes a "flat" pension of a uniform amount granted to all 
retired teachers, irrespective of differences in the term of serv- 
ice or compensation. Other plans graduate the amount so 
as to make it accord with either length of service or rate of 
compensation of the superannuated teacher. A more flexible 
method is one which adjusts the amount so as to reflect the 
length of a teacher's service as well as the rate of compensa- 
tion. Finally, the most flexible method is one recently devised, 

^The "life expectancy" or "expectation of life" is different at each age. 
It represents the probable number of years of life that persons of the 
same age may look forward to. See Appendix 4, table 5. 

64 



Superannuation Benefits 

which divides the benefit into two elements and makes one 
dependent upon the contributions and age of the teacher, 
and the other upon his length of service and rate of com- 
pensation. 

"Savings or Thrift" Systems. Under the pure savings 
systems each teacher's contributions are deposited at interest 
and are eventually paid to him in a lump sum. The advantage 
of this method lies in the fact that no one forfeits any part 
of his contribution or receives more than he contributed at 
the expense of another; further, it is not necessary to investi- 
gate the rates of withdrawal, mortality and other factors 
determining cost. On the other hand, the disadvantage of 
this method is that it is a matter of chance whether the amount 
ultimately received by the member has any relation to his 
need for financial relief. Thus, the sum of $i,ooo might be 
more than enough in the case of a member who lives but 
a year after retirement, but would be utterly inadequate in 
the case of a member who lives a prolonged period. Out of 
the twenty-four systems selected for study, not one is operated 
under this method. 

"Flat" Pension. In "flat" pension systems the amount 
generally approximates one-half of the annual rate of com- 
pensation. While possibly satisfactory to a majority of 
teachers, this schedule is inequitable to those whose ambition 
has advanced them to the higher paying positions or who have 
remained at work for exceptionally long terms. From the 
viewpoint of the state or the city the "flat'' pension is dis- 
advantageous because it fails to facilitate the release of super- 
annuated teachers and supervisors from places of higher 
responsibility. For these reasons "flat" pensions are rarely 
adopted. Of the twenty-four systems subjected to analysis, 
only four provide uniform pensions and one of these, that of 
Pittsburgh, is now contemplating granting pensions graduated 
according to length of service. In the four "flat" pension sys- 

65 



Teachers' Pension Systems in the United States 



terns referred to, the amounts of uniform benefits and the mini- 
mum retirement conditions are as follows :^ 



Pension System 

Illinois 

California . . . 

Chicago 

Pittsburgh . . . 



Amount of 


Minimum 


Retirement Conditions 


lat" Pension 


Years of S 


ervice 


Age 


$400 


25 




50 


500 • 


30 




— 


400 


25 




— 


500 


25 




— 



Amount of Pension Determined by Length of Service. 
The method of graduating pensions to accord with the length 
of service is more equitable to the majority of the teaching 
personnel than the "flat" pension method, because it provides 
"more pension for more service." It is likewise more advan- 
tageous to the school system, since the prospect of increase 
in pension tends to keep teachers in the service who other- 
wise might avail themselves of their retirement privileges at 
the first opportunity. There remains, however, the serious 
objection of inadequate pensions for teachers of the higher 
grades who are expected to retire on a considerably smaller 
proportion of their salaries than the majority of the teaching 
force. 

Five of the twenty-four analyzed systems provide "length 
of service" pensions as shown in the table below. 
•'Length of Service" Pensions 



Pension 


Amount Allowed 
for Each 
Year of 
Service 


Pension 


Minimum Retire- 
ment Conditions 




System 


Minimum 


Maximum 


Years 
of 

Service 


Age 


Pension 


Minnesota. . 
Wisconsin . . 


$17.50 

(for service up 

to 20 years) 

$30.00 

(for service 

after 20 years) 

$12.50 


$350.00 
312.50 


$500 
450 


20 
25 




$365.96 = 



^This statement excludes the "flat" pension of the Boston Teachers' 
Retirement Fund, which originally amounted to $180 per annum, but was 
recently reduced to $120 per annum. These "flat" pensions are supple- 
mented by considerably larger graduated allowances from the Boston 
Permanent School Pension Fund. The combined operation of both 
funds may, therefore, be considered as a system of graduated pensions. 

2As of September i, 1915. In obtaining the average one disability pen- 
sion of less than $312.50 per annum was included. 

66 



Superannuation Benefits 

'Length of Service" Pensions — Continued 





Amount Allowed 
for Each 
Year of 
Service 


Pension 


Minimum Retire- 
ment Conditions 




Pension 
System 


Minimum 


Maximum 


Years 
of 

Service 


Age 


Average 
Pension 


Maine 


$6.00 

(for service up) 
to 25 years) 

$10.00 
(for service 

after 25 years) 


150.00 


250 


25 


60 


107.31' 


Cleveland. . 


$12.50 


375.00 


450 


30 




.. 


Denver .... 


19.20 




480 


25 


55 
(60 for 
men) 





It will be noted that in all but one of these systems an 
inducement is held out to teachers to remain in the service 
after the expiration of the minimum period of service required 
for retirement, by permitting the increase in the amount of 
pension allowed to run on after such period, for periods vari- 
ously fixed at five years in Minnesota, six years in Cleveland, 
ten years in Maine and eleven years in Wisconsin. 

Amount of Pension Determined by Salary. A large 
number of teachers' retirement systems in this country have 
adopted the method of adjusting pensions to the teacher's 
rate of pay at the time of retirement, or to the average rate 
of pay during a period of years preceding it. One-half of the 
salary is generally granted with certain minimum and maxi- 
mum limitations. This method is in one respect an improve- 
ment on the "length of service" method, inasmuch as it is 
more equitable to teachers of varying salary grades. At the 
same time it disregards an applicant's length of service and 

lAs of May, 1916. The low average is explained by the fact that of 
the total number of 200 pensioners, 150 had retired before 1913, when 
the present system was established, and are receiving retroactive half- 
pensions of $75 to $125 per annum. 

67 



Teachers' Pension Systems in the United States 



consequently discriminates against teachers who have devoted 
their energies to the profession for exceptionally long terms. 
Pensions based on the scale of salary in different systems 
are shown in the following table. 

Pensions Based on Salary Scale 







Amount of 


Minimum 


Retire- 








Pension 


MENT Conditions 






Proportion 
of 










Average 


Pension 










Pension 


System 


Salary 


Mini- 


Maxi- 


Years 








Granted 


mum 


mum 


of 
Service 


Age 




New York 


}/2 last 5 years' 


None 


$600 


25 


60 


$270.03 1 


(State) 


average salary 












New Jersey 


H last 5 years' 


None 


None 


35 




542.00* 


(State Pen- 
sion) "- 
New Jersey 


average salary 












60 per cent last 


$250 


$650 


20 




467.00 ♦ 


Retirement 


5 years' aver- 






(proof 






Fund' 


age salary 






of in- 
capacity) 
30 






Virginia 


H last 5 years' 


None 


500 


50 






average salary 








(58 for 
men) 




Philadelphia . 


K final salary . . 


$400 


1000 


30 


50 


449.00 5 


Baltimore . . . 


V^ last 5 years' 
average salary 


360 


600 


40 






Bufifalo 


J^ final salary . . . 


None 


800 


30 
(35 for 
men) 






New Orleans. 


]4 last 5 years' 


§300 


600 


30 or 


65 


425.90 « 




average salary 













^As of January, 1916; includes disability pensions. 

^It is interesting to note that a teacher in New Jersey, who proves to 
the board of trustees of the retirement fund that he has become incapaci- 
tated, may retire on an annuity of 60 per cent of the average salary of 
the last five years. If he has completed 35 years of service he may also 
receive from the state a pension of 50 per cent of his average salary. The 
combined benefit from the two sources frequently totals no per cent 
(max. $650; min. $250) of salary. A retirement income larger than the 
compensation for active service is unprecedented in the history of re- 
tirement systems. It offers a substantial inducement to retire immediately 
upon the completion of the thirty-fifth year of service, a temptation which 
few, if any, teachers are able to resist. It adds to the difficulties of safe- 
guarding the pension system and the retirement fund. 

'As of June 30, 1915. 

*As of June 30, 1916; the average of new annuities granted during 
1916 was $546. 

"As of December 31, 1916; includes disability pensions of less than 
$400 per annum. 

"As of August 31, 1915; excludes disability pensions. 

68 



Superannuation Benefits 

Amount Determined by both Length of Service and 
Salary. The method of graduating retirement allowances to 
accord with length of service and rate of compensation is free 
from the disadvantages resulting from the grant of "flat," 
"length of service" and "rate of pay" pensions described in 
the preceding paragraphs. It is obviously just to grant to a 
teacher who has served for a long term of years a higher 
benefit than to one who has retired at the first opportunity. 
The practical advantage is in the incentive to the individual 
to continue in service. It is also apparent that a pension, 
reflecting an applicant's rate of compensation and, therefore, 
conforming to his standard of living, affords an especially 
effective means of releasing from service the incumbents of 
the higher positions. 

Few systems in this country have adopted this method. 
Of the twenty-four systems analyzed, only the system of 
Michigan and the Boston Permanent Fund provide "gradu- 
ated pensions," the detailed provisions being as follows : 



Pensions Graduated According to Length of Service and Salary 





Proportion of 
Salary 
Granted 
for Each 
Year of 
Service 


Amount of 
Pension 


Minimum Retire- 
ment Conditions 




Pension 
System 


Mini- 
mum 


Maxi- 
mum 


Years 
of 

Service 


Age 


Tension 


Michigan — 

Boston Per- 
manent Fund 


1/60 of last 5 
years' average 
salary 

1/90 of final sal- 
ary 


$250 
104 


$500 
600 


25 
10 


65 


$339,671 



The period of automatic increases in the pension of a Michi- 
gan teacher is restricted to five years. An allowance of 
twenty-five-sixtieths of the last five years' average salary is 
granted after a minimum of 25 years of service. This allow- 

'As of January 31, 1916. Average includes disability pensions. 
69 



Teachers' Pension Systems in the United States 

ance increases by one-sixtieth of salary for each additional 
year of delay in retirement, until a maximum pension benefit 
of thirty-sixtieths or one-half of salary is paid to teachers 
retiring after a total service of 30 or more years. 

The data shown in the statement for Boston teachers refer 
to the Permanent School Pension Fund entirely supported by 
the city. The free pension amounts to one-ninetieth of the 
final salary for each year of service and varies from ten- 
ninetieths to thirty-ninetieths of such salary granted after 
30 or more years of service. It is generally supplemented 
by an annuity from the Retirement Fund Association, which 
is financed entirely by the teachers. The annuity amounted 
originally to $180, but, owing to shortage in funds, has 
recently been reduced to $120. The combination of free 
pension and annuity results in a total allowance of about one- 
half of the final salary of the rank and file teacher. It 
amounted to $471.67, on the average, in January, 19 16, $132 
being the annuity and $339.67 the average free pension granted 
by the city. 

Combined Benefit, Annuity and Pension, Dependent on 
Contributions, Age, Length of Sei-vice and Salary. The new- 
est method divides the benefit into two elements : the annuity 
and the pension. It fixes the first in accordance with the con- 
tributions and age of the members at the time of retirement, 
indirectly reflecting their length of service and salary. It 
makes the second either equal to the annuity (Massachusetts 
and Connecticut) or directly proportionate to length of ser- 
vice and salary (New York City and Pennsylvania). 

In Massachusetts and Connecticut each teacher contributes 
5 per cent of his salary, irrespective of age at entrance into 
the service, until he reaches the age of 60 years, when his 
contributions cease. If the teacher elects to retire at once, 
he is granted the annuity purchased by the total amount of 
his individual contributions, with accumulations of interest. 

70 



Superannuation Benefits 

To this annuity is then added a free state pension of equal 
amount. If the teacher postpones retirement, his annuity 
increases with each year's delay, owing to the reduction in 
probable life term. For instance, if a teacher's contributions 
are sufficient to purchase an annuity of $500 when he is 60 
years old, the same contributions, left to accumulate at interest 
for an additional ten-year period, will pay for an annuity of 
about $750, if the teacher retires upon reaching the maximum 
age limit of 70 years. Owing to the fact that teachers pay 
in the same percentage of salary, the total allowance, annuity 
plus pension, increases with length of service and rate of pay 
of the retiring teacher. The adequacy of such an auto- 
matically determined allowance depends, however, on an addi- 
tional factor, namely, the age at which the teacher enters the 
service, and the consequent number and amount of his con- 
tributions before retirement. The allowance to which a late 
entrant becomes entitled is apt to be insufficient to maintain 
him in a position approximating that which he enjoyed before 
retirement. To illustrate, a teacher entering the service at 
45 and contributing annually $75, 5 per cent of a salary of 
$1500, until he reaches 60 would accumulate $1410.61, in- 
clusive of interest. This amount would purchase at that age 
an annuity of $132.32. In addition to this annuity the teacher 
would receive from the state a pension of the same amount. 
The combined benefit, which would total $264.64 or about 
one-sixth of his salary, could scarcely be called an adequate 
means of support. 

The impracticability of the accumulations of flat rate assess- 
ments determining the benefits is thus demonstrated. It em- 
phasizes the advantage of first settling upon an adequate scale 
of benefits and then calculating the contributions required 
from teachers of various ages at entrance into the service to 
produce such benefits. 

71 



Teachers' Pension Systems in the United States 

The new systems of New York City and Pennsylvania are 
based upon such a procedure and thereby avoid the defects 
of the Massachusetts and Connecticut systems. The contri- 
butions of each teacher are fixed in accordance with his age at 
the time he begins contributing and according to the number 
of years of prior service. They are fixed in such a way as 
to purchase at a certain age and under average conditions 
of advancement an "annuity" which, together with the city's 
"pension," will equal one-half of the teacher's average salary 
of the last ten years. If the teacher advances more rapidly 
than the average, his combined benefit will be somewhat less 
than half-pay; on the other hand, if he advances less rapidly, 
it will amount to more than half-pay. If he remains in the 
service beyond the superannuation age, his annuity will in- 
crease and the total benefit will exceed half-pay. The "pen- 
sion" is always fixed as a certain proportion of the teacher's 
salary and increases with each year of service up to 35 years, 
when it ceases to increase. 

The advantage of this method lies in the fact that it 
reflects the differences between individual cases with regard 
to six important factors, length of service, salary, rate of 
advancement, amount contributed by the employee, his age 
at the time of entering the service, and also his age at the 
time of retirement. It offers an inducement to a teacher to 
remain in the service after he has completed the minimum 
requirements and until he feels that he has become incapaci- 
tated; and it is equitable, for it does not tax one group of 
beneficiaries in favor of another. 

Further development of the pension movement will prob- 
ably result in the introduction of still more ingenious methods. 

Provisions for Minimum and Maximum Pensions. The 

sufficiency of a retirement allowance to support a beneficiary 
in reasonable comfort is an important consideration. Inade- 
quate pensions, i. e., amounts insufiicient to maintain a pen- 

72 



Superannuation Benefits 

sioner, are ineffective as a means of releasing the superannu- 
ated from service and, therefore, fail to solve the problem. 
The scale of benefits in a pension system is fixed with a view 
to providing an adequate financial protection to the majority 
of its beneficiaries. As stated in an earlier section, a pension 
of approximately one-half of the active salary is usually 
granted to the typical or average teacher. In exceptional 
cases, however, the application of general rules results in the 
grant of allowances below a subsistence level. To avoid this 
minimum pension restrictions are usually adopted. In systems 
which graduate pensions according to length of service, those 
entering late in life and becoming superannuated after a short 
period of teaching are afTected. In plans where benefits are 
based on a fixed proportion of salary, the minimum limita- 
tion protects the interests of teachers receiving exceptionally 
low pay, as is the case especially in rural districts and in the 
Southern states. 

No attempts have been made in existing systems carefully 
to ascertain what minimum benefit will be sufficient from the 
point of view of the economic needs of the teacher and the 
effectiveness of the system. While the purpose seems gen- 
erally to fix an amount sufficient to shield the pensioner from 
actual want, the amount is usually arbitrarily determined 
and varies considerably in different systems, as shown in the 
table below. Together with the minimum pension the table 
below presents the average annual salaries. It must be borne 
in mind that the average salaries of teachers who become 
eligible to retire on demand or because of superannuation are 
considerably higher than the averages shown in the statement, 
which include the salaries of large numbers of young teachers 
of the lower, initial salary grades. For instance, the average 
given for all New York City teachers is $1197.00, while the 
lowest salary, with enough service to its credit for superannu- 
ation retirement, is $1500.00. 

73 



Teachers' Pension Systems in the United States 
Minimum Pension Provisions 



Pension System 


Minimum 
Pension 


Average 
Annual 
Salary 

1912-1913 


Massachusetts 


None 1 

K salary 

Vi salary 

60 per cent 

salary 

min. $250 

Yi salary 

Yi salary 

$150 3 

312* 

120 

250 

300 

312.50 

350 

360 

375 

400 

400 

400 

500 

500 

None 


$ 657 00 


Connecticut 




Pennsylvania 




Denver 




New York State 


935.70 


New Jersey State Pension 




New Jersey Retirement Fund 




Virginia 


878.75 2 
307.17 


Buffalo 


932.50 


Maine 




Boston Permanent Fund, 


} 1,001.00 
519.52 


Boston Teachers' Fund 


Michigan 


New Orleans 


655.00 


Wisconsin 


622.86 


Minnesota 


459.57 


Baltimore 


745.61 


Cleveland 




Philadelphia 


861 00 


Illinois 


662.07 


Chicago 


1,034.00 


California 


1,153.00 


Pittsburgh 


1,031.38 


New York City 


1,197.00 







Differences in the cost of living between various parts of 
the country and particularly betw^een cities and rural districts 
of a state must be considered when comparison is made of 
the minimum pensions just presented. Attention is called to 
the fact that among the first fourteen plans presented, show- 
ing minimum pensions of $350 and less, eight are state sys- 
tems, which in large part are applicable to teachers of rural 
districts where the cost of living and salaries are low. On 

^A minimum of $300 is applicable only to teachers who were in the 
service on July i, 1914. 

^In 1915, according to Mr. Fackler's Report on the Teachers' Retire- 
ment Fund. 

"The minimum pension retroactively granted to those who retired be- 
fore the establishment of the present system in 1913 is $75. 

*One-ninetieth of salary for each year of service; min. $312 after 30 
years of service; min. $104 below 30 years. 

74 



Superannuation Benefits 

the other hand, the eight systems last mentioned, with mini- 
mum limitations of $360 and above, operate, with two excep- 
tions, in the larger cities and apply to teachers with relatively 
high rates of compensation. 

Maximum Pension. A certain proportion of salary is 
frequently established as a maximum limitation on pensions. 
Such a limitation bears equally on all employees. In this 
country one-half of the salary is generally the highest pension 
granted. If pensions are graduated according to length of 
service or compensation, or depend on both conditions, the 
variations in amount are below the half-pay level. 

In many systems, however, the maximum is expressed as 
a fixed amount and in such cases affects the retirement of 
only the higher salaried employees by restricting their benefits 
to a smaller proportion of salary than is granted to the rank 
and file. 

The maximum limit may present the advantage of pre- 
venting extravagant pensions and "excessive protection," but 
it also presents the disadvantage of not placing the authori- 
ties in a sufficiently strong position to retire superannuated 
higher salaried teachers and supervisors. Its effect depends 
on how the maximum is fixed. 

An examination of maximum limits adopted in existing 
systems reveals the fact that they have been fixed arbitrarily 
and at such a low level as to injure the efficiency of the 
schools. The teachers on whose initiative the systems have 
been established have not given due consideration to school 
efficiency. Frequently at the establishment of a system the 
school administration maintained an attitude of indifference 
and failed, as a consequence, to protect its own interests. 
Under such circumstances the majority of teachers of a sys- 
tem have a predominant voice in the determination of retire- 
ment conditions. Receiving low or medium salaries they 
object to their superiors drawing substantially larger benefits 
than their own. The majority of teachers do not seem to 

75 



Teachers' Pension Systems in the United States 

realize that their opportunities for advancement are lessened 
by the reluctance of those in higher positions to retire on a 
fractional part of their salaries. Those who argue that high 
salaries place their recipients in a better position jto 
protect themselves on their own volition against the con- 
tingency of old age seem to overlook one of the most im- 
portant conditions which has caused the spread of the pension 
idea. Pensions are provided not only because of the economic 
inability of the individual to make protective financial arrange- 
ments, but also because of his failure to anticipate early 
enough the possibility of future risks and his tendency to 
live up to his entire income. This explains why pensions are 
provided not only for poorly paid laborers, but also for college 
professors whose salaries are above the mere subsistence level. 
The maximum restrictions are also urged as a substantial 
saving in cost. It must be remembered, however, that they 
apply to a relatively small proportion of a teaching force. 
The incumbents of the higher positions, moreover, have gen- 
erally a tendency to remain in service much later in life than 
the average teacher. Retiring at advanced ages, their pen- 
sions, due to the small number of probable payments, cost 
relatively less than benefits of like amounts granted to the 
earlier retiring classroom teachers. Owing to these conditions 
the total saving which may be effected by maximum restric- 
tions of the usual type generally amounts to but a fractional 
part of the total liabilities of a pension system. 



76 



Superannuation Benefits 
Maximum Pension Provisions 



Pension System 



Average 
Annual 




Maine 

Illinois 

Chicago 

Wisconsin 

Cleveland 

Denver 

Minneapolis 

California 

Virginia 

Michigan 

Pittsburgh 

New York State 

Baltimore 

New Orleans 

Boston Permanent Fund .... 

Boston Teachers' Fund 

Buffalo 

Philadelphia 

Massachusetts 

New York City 

New Jersey State Pension . . . 
New Jersey Retirement Fund 



$ 392.98 

662.07 

1,034.00 

622.86 



459.57 
1,153.00 
307.17 
519.52 
1,031.38 
935.70 
745.61 
655.00 



'Pension also limited to one-half of salary. 
'Pension also limited to one-third of salary. 

'At age sixty, allowance automatically increases to about $i,SOO if re- 
tirement is postponed until age 70. 

'Pension also limited to 60 per cent of salary. 



77 



CHAPTER IV 
DISABILITY BENEFITS 

The release of teachers from active service because of dis- 
ease or illness before they have complied with the regulations 
for superannuation retirement is a particularly difficult phase 
of the pension problem. The establishment of disability fea- 
tures is necessary to school efficiency, because the presence 
in the classroom of a sick teacher is as unjust to the children 
as is the presence of one incapacitated because of old age. 
The suffering which is caused by cases of early disability is 
pitiable and makes a strong appeal to human sympathy. The 
appeal is strengthened by the consideration that there is no 
adequate insurance against disability available to the teacher 
within his means, and that on the other hand his savings, if 
any, during a generally short period of service are insufficient 
to provide satisfactory relief. As a result, where disability 
provisions are lacking, the sick teacher continues to teach 
longer than is good either for himself or the school, or else 
administrative authorities are tempted to an overliberal inter- 
pretation of rules for sick leave with pay, which is an ex- 
pensive and unsatisfactory substitute for disability pensions. 

Due to the comparatively infrequent occurrence of bona fide 
disability the contingency is one which may be guarded against 
through cooperative effort. The cost of moderate disability 
provisions is slight as compared with the cost of superannua- 
tion pensions, if sufficient care is taken to safeguard them 
against unwarranted use. 

To establish proper safeguards, however, is a real diffi- 
culty. For the protection of all concerned, those entering the 

78 



Disability Benefits 

service must be required to be in good physical condition. 
The grant of a disabiHty pension must be preceded by a 
reHable examination of the appHcant and must be followed 
by periodical reexaminations to test the continuance of the 
disabling disease or illness. On the thoroughness of these 
protective measures depends the beneficial effect of disability 
features as well as their cost. 

Conditions under which Disability Benefits are Pro- 
vided. Although the majority of existing pension systems 
include provisions for the retirement of disabled teachers, the 
scope and nature of the rules clearly indicate that the dis- 
ability problem has not been given adequate consideration. 
Of the twenty-four systems subjected to detailed study, two, 
one operating in the state of Maine and the other in the city 
of Pittsburgh, entirely disregard the existence of the disability 
problem. The new system of Connecticut started without a 
disability provision.^ The rules of twenty systems take cogni- 
zance of disability only after varying periods of service. 

The risk of disability, it must be remembered, is ever pres- 
ent, and release from active duty is desirable, irrespective 
of the number of years the disabled teacher may have taught. 
This makes the absence of provisions, during the first years 
of service when the teacher is least prepared financially to take 
care of the contingency of disability, most regrettable. The 
omission is not warranted by considerations of cost, which 
is relatively small because of the in frequency of cases of 
disability among the younger and generally healthy teachers. 
It is probably due to difficulties in properly safeguarding the 
grant of disability pensions that they are not provided in 
existing systems until the teachers have to their credit certain 
minimum terms of service. 

As in connection with superannuation benefits, applicants 
for disability pensions are credited in many plans with a cer- 

^The New Jersey 3S-year Service Pension does not contain a disability 
clause, but the New Jersey Teachers' Retirement Fund supplements it 
with a disability provision. 

79 



Teachers' Pension Systems in the United States 

tain proportion of their service outside the jurisdiction of 
the educational system from which they seek retirement. The 

Conditions Under Which Disability Benefits Are Provided 



Pension Sysiem 




Minimum Years of Service Entitling to 
Disability Pension 



Within 

Jurisdiction 

of 

Retiring 

System 



Credtied 
for 
"Outside" 
Ex- 
perience 



States: 

1. Pennsylvania 

2. Illinois 

3. New York 

4. New Jersey Retirement 

Fund 

5. New Jersey State Pen- 

sion 

6. Massachusetts 

7. Minnesota 

8. Wisconsin 

9. California 

10. Virginia 

11. Michigan 

12. Maine 

13. Connecticut , 

Cities; 

1. New York City 

2. Chicago 

3. Philadelphia 

4. Cleveland 

5. Boston Permanent 

Fund 

6. Boston Retirement 

Fund 

7. Pittsburgh 

8. Baltimore 

9. Buffalo 

10. New Orleans 

11. Denver 



20 

20 

(25 for 

men) 

5 

10 



20 



No disability provision 

20 

10 

18 

15 

20 

15 
No disability provision 



10 



No disability provision 

20 

16 

(20 for men) 

5 
10 



None 



None 

5 
None 



None 

6 

None 

10 

None 



None 

4 
(5 for 
men) 
None 



minimum service restrictions in the twenty-four systems under 
consideration are shovv^n in the table above. 

Amount of Disability Benefits. The principal points dis- 
cussed in a preceding chapter regarding the amount of super- 

8o 



Disability Benefits 

annuation pensions apply with equal force to disability allow- 
ances and need not be repeated. It is important, however, 
to emphasize the desirability of scaling disability benefits 
(granted after relatively short periods of service) below the 
amounts which are available to superannuated teachers. This 
is required not only by considerations of equity but as an im- 
portant protection to disability reserves against abuse by 
teachers, who allege disability merely because they wish to 
be pensioned earlier than is permitted under the stricter pro- 
visions for retirement. If, for instance, the disability benefit 
after lo years of service is equal to the superannuation pen- 
sion granted after 30 years of service, the incentive for early 
disability retirement may, in certain circumstances, such as 
impending marriage, or change of residence or occupation, 
prove so strong as to overcome the customary safeguard of a 
medical diagnosis, never infallible at best. 

The importance of keeping disability benefits below the 
level of superannuation pensions has been recognized in all 
but three of the foregoing twenty systems which have disability 
features. These include the systems of Virginia and Buffalo, 
which provide half-pay pensions irrespective of length of 
service or cause of retirement. The New Jersey Teachers' 
Retirement Fund grants 60 per cent of salary to those dis- 
abled after 20 or more years of teaching. It must be observed, 
however, that the incentive to retire soon after having taught 
20 years gradually disappears as the teacher continues to 
serve, since the state pension system supplements the disability 
annuity by a straight pension of 50 per cent of salary, if a 
teacher has had 35 years of service.^ 

The extent to which disability benefits may be reduced has 
its limitations; as the subsistence level is reached a minimum 
restriction becomes necessary. Such limitations have been 
generally provided, the commonly established minimum pen- 

iThe new law enacted in New Jersey on April 10, 1919. and discussed 
in Chapter XVIII, abolished this double system. 



Teachers' Pension Systems in the United States 

sions varying as a rule between $200 and $250. There are, 
however, a number of systems which have no minimum 
restrictions and grant pensions after short periods of service 
of such small amounts that they are apt to place the bene- 
ficiary in the predicament of not having enough to live on 
and too much to prevent his dying. 

The twenty systems which include disability provisions 
have a bewildering variety of regulations for the determina- 
tion of the amount of pension. In the table on the page opposite 
these have been arranged in the ascending order of their mini- 
mum pension amounts. 

Medical Examinations and Reexaminations. Provisions 
for the retirement of disabled teachers are a part of the gen- 
eral subject relating to the health condition of the teaching 
personnel, some phases of which are not customarily con- 
sidered in connection with the pension problem, although 
closely related to it. 

First of all the recruiting of the personnel must be con- 
sidered. Though teaching does not involve special physical 
hardship or exposure to inclement weather, it imposes con- 
siderable strain on the nervous system of the teacher, because 
he is required to exercise constantly and to an unusual degree 
patience and self-control. It is important, therefore, to sub- 
ject applicants for teachers' positions to a thorough medical 
examination, especially of the nervous system, to insure that 
only those enter the service who are able to withstand the 
mental strain which is inevitably imposed by classroom work. 
These entrance tests are of special importance where dis- 
ability benefits are available immediately upon entrance or 
after a few years of service. It is a safeguard against dis- 
eased individuals entering the profession for the sole purpose 
of claiming a disability allowance. Medical examinations are 
required by the entrance regulations of the majority of edu- 
cational systems. As a rule, however, they are superficially 
made and cannot compare in thoroughness with the medical 

83 



Disability Benefits 



Amount of Disability Benefits 





Minimum 








Service 








for Dis- 






Pension System 


ability 
Retire- 
ment 


Scale of Pension 


Minimum Pension 


Massachusetts 


20 


"Annuity" plus "pension" of 
1/30 of superannuation pen- 
sion for each year of service 




Pennsylvania 


10 


1/90 of salary for each year of 


30 per cent of 






service 


salary 


New Orleans 


5 


1/80 of salary for each year of 


6.25 per cent of 






service 


salary and $50 


Philadelphia 


5 


1/60 of salary for each year of 


8.33 per cent of 






service 


salary and 
$66.67 


New York City.... 


10 


20 per cent of salary plus an- 


20 per cent of 






nuity 


salary 


Michigan 


15 


1/60 of salary for each year of 
service 


25 per cent of 






salary 


Baltimore 


20 


1/80 of salary for each year of 


25 per cent of 






service 


salary 


New York State. . . 


15 


1/50 of salary for each year of 


30 per cent of 






service 


salarv 


Chicago 


15 


$133.33 for 15 years' service, 


$133.33 






increased by $26.67 annually 




Denver 


10 


$19.20 for each year of service 
$12.50 for each year of service 


$192.00 


Wisconsin 


18 


$225.00 


Boston Retirement 






Fund 


2 


$132.00 


$132.00 


Boston Permanent 








Fund 


10 


1/90 of salary for each year 
of service 


$104.00 


Illinois 


15 


$16 for each year of service . . . 


$240.00 


California 


15 


$16.67 for each year of service 
$12.50 for each year of service 

50 per cent of salary 

50 per cent of salary 


$250.00 


Cleveland 


20 


$250.00 


Virginia 


20 


50 per cent of 


Buffalo 


20 


salary 
50 per cent of 




(25 for 


salary 




men) 






New Jersey Retire- 








ment Fund 


20 


60 per cent of salary 


60 per cent of 
salary and $250 


Minnesota 


15 


$17.50 for each year of service 


$262.50 



S3 



Teachers' Pension Systems in the United States 

tests to which appHcants for poHcies are subjected by Hfe 
insurance companies. 

The heaUh of teachers in active service is the next im- 
portant question. It involves the consideration of all condi- 
tions under which the teacher must labor, including sanitation 
of school buildings, supervision of the health of school chil- 
dren with whom the teachers are in daily contact, and other 
measures. Of more direct bearing on the pension problem, 
however, are existing regulations relating to the absence of 
teachers from duty on account of ill health. The payment 
of full or reduced salary during leave of absence, especially 
of long duration, is in the nature of a temporary disability 
pension. If such leaves are granted judicially, they produce a 
beneficial effect on the service and tend to lessen the number 
of permanent disability retirements. The machinery for the 
administration of sick leave regulations serves also as an 
important check on the health condition of individual teachers, 
and facilitates the compulsory retirement of sick teachers on 
disability allowances. 

A thorough medical examination of a teacher who is to be 
retired because of accident or disease is the most important 
safeguard for the disability features of a pension system. 
For obvious reasons it would appear unwise to use the certifi- 
cate of an applicant's private physician as a sufficient basis 
for the grant of a disability benefit. To insure reliable reports 
it is important that medical examinations be made by physi- 
cians under the pensioning authority. Because of their 
familiarity with the demands of the teaching profession, such 
physicians are in a much better position than private prac- 
titioners to determine whether or not a teacher is unfitted 
for the work of a classroom. It is also desirable that the 
official medical examiners be specialists on nervous diseases, 
which are the principal cause of breakdown among women 
teachers. 

A review of the rules of the twenty-four pension systems 
84 



Disability Benefits 

analyzed fails to disclose thorough methods of disability 
examinations except in the new systems of New York City 
and Massachusetts. In the first place, the legal language 
relating to the disability features is generally vague, leaving 
it to the discretion of the pensioning authorities to devise 
such rules as they may deem best. Only in ten systems^ 
is special mention made in the law with regard to the certifi- 
cation of disability by physicians of the various pension 
boards. In other systems disability pensions may be granted 
on the basis of certificates of physicians who have no official 
connection with the retirement authorities and whose fees 
come from the applicant.^ 

Of no less importance than the medical examination of 
applicants for retirement is the periodical reexamination of 
pensioners for the purpose of testing the continuance of dis- 
ability and the return to duty of those whose health has been 
restored. The prospect of such periodical reexaminations 
serves also as an effective safeguard against unwarranted 
retirement applications. 

The only system which makes provision for systematic com- 
pulsory reexaminations is the new system of New York City. 
In the systems of Illinois, New Jersey, Minnesota, Virginia 
and Philadelphia, rules exist for the termination of pension 
if a disability pensioner resumes teaching. The practical value 
of such rules, however, is very limited as the return to duty 
is made on the initiative of the teacher and not as a result 
of systematic administrative supervision of the disability 
pensioners. 

^Illinois, New Jersey, Minnesota, California, Chicago, Philadelphia, New 
Orleans, Massachusetts, New York and Pennsylvania. 

^This was the practice in the old system of New York City. The new 
system requires the applicant to be examined by the board's physician. 



85 



CHAPTER V 

DEATH AND WITHDRAWAL BENEFITS 

Death Benefits. Responsibility for the support of others 
makes the carrying of Hfe insurance one of the obvious duties 
of the individual. It is for this reason that the risk of death 
is most frequently provided against, although it is neither 
the most immediate nor the most expensive risk which has a 
claim upon the individual's earnings. 

Cooperative effort of a large homogeneous group of indi- 
viduals is the best and cheapest method by which the risk to 
the individual may be reduced. Especially is this true of life 
insurance in an educational system. It requires relatively 
low premiums as contrasted with those of insurance com- 
panies, not only because the costs of soliciting agents and of 
administration are reduced and the profits eliminated, but 
because the mortality among teachers is low as compared with 
that of the average of insured lives. 

The opportunity for making a retirement measure more 
attractive by including the comparatively inexpensive death 
benefit among its provisions has not been appreciated in the 
establishment of existing pension systems. This is probably 
due to the fact that the proportion of men, who alone are 
apt to be actively interested in life insurance, is comparatively 
small, comprising in 1912-1913 only about 20 per cent of the 
total teaching personnel in the United States. Death benefits 
are accordingly considered in existing systems only in rela- 
tion to the propriety of refunding the accumulated contribu- 
tions of members. 

Nineteen of the twenty-four systems analyzed exact con- 

86 



Death and Withdrawal Benefits 

tributions from teachers. Only eight systems, however, 
operating in Minnesota, Cleveland, Baltimore, New Orleans, 
Massachusetts, Connecticutt, Pennsylvania and New York 
City provide for refunds in case of death. The system of 
New York City also provides an additional death benefit in 
certain cases. 

The systems of IVIinnesota, Cleveland, Baltimore and New 
Orleans provide for the refund in case of death of only one- 
half of the teacher's contributions without interest. In Minne- 
sota and Cleveland teachers contribute flat amounts, in Balti- 
more and New Orleans a proportion of salary. In all four 
systems the assessments are small and average from i per cent 
to 2 per cent of salaries. The refunds of one-half of these 
assessments, especially without interest, are consequently in- 
sufiicient. Even after a long period of contribution they are 
barely sufficient for defraying funeral expenses as may be 
seen from the statement on the following page showing the 
refunds payable under the systems of Minnesota, Cleveland 
and Baltimore (New Orleans having a scale of assessments, 
and hence of refunds, similar to that of Baltimore). 

Much more adequate are refunds of contributions in Massa- 
chusetts and Connecticut, where teachers contribute 5 per cent 
of salary, and their entire accumulations with compound 
interest are returned.^ The minimum assessment is $35 from 
salaries of $700 and less, and the maximum $100 per annum 
from salaries of $2000 or more. The accumulations during 
the first years of service are too small to take the place of 
customary life insurance. After the sixteenth year, however, 
they exceed one year's salary and may be considered as 
adequate death benefits. The refunds which become available 
at the end of each successive year are presented on page 



The recently enacted scientific systems of New York City 
,te a 

87 



^Interest is credited at such rate as has been actually earned. Four 
per cent was credited in 1916. 



Teachers' Pension Systems in the United States 



Refund of One-Half of Teachers' Contributions in Minnesota, 
Cleveland and Baltimore 









Baltimore 


Year 


Minnesota 


Cleveland 


(Maximum 
Refunds) 


1 


$ 2.50 


$10 


$ 7.20 


2 


5.00 


20 


14.40 


3 


7.50 


30 


21.60 


4 


10.00 


40 


28.80 


5 


12.50 


50 


36.00 


6 


17.50 


60 


43.20 


7 


22.50 


70 


50.40 


8 


27.50 


80 


57.60 


9 


32.50 


90 


64.80 


10 


37.50 


100 


72.00 


11 


47.50 


110 


82.75 


12 


57.50 


120 


93.50 


13 


67.50 


130 


104.25 


14 


77.50 


140 


115.00 


15 


87.50 


150 


125.75 


16 


97.50 


160 


136.50 


17 


107.50 


170 


147.25 


18 


117.50 


180 


158.00 


19 


127.50 


190 


168.75 


20 


137.50 


200 


179.50 


21 


152.50 


210 


193.90 


22 


167.50 


220 


208.30 


23 


182.50 


230 


222 70 


24 


197.50 


240 


237.10 


25 


212.50 


250 


251.50 


26 


212.50 


260 


265.90 


27 


212.50 


270 


280.30 


28 


212.50 


280 


294.70 


29 


212.50 


290 


309.10 


30 


212.50 


300 


323.50 



and Pennsylvania provide for a return to the dependents of 
a deceased teacher of all his contributions together v^ith com- 
pound interest at 4 per cent. In addition, in New York City, 
in case death occurs in active service, after the teacher is 
eligible to retirement, his dependents receive a benefit equal 
to one-half of his annual salary. Furthermore, novel features 
are included in the systems which considerably improve the 
provision for dependents as compared with the provisions in 

88 



Disability Benefits 

other systems. A teacher is given two options : one, to reduce 
his benefit with a provision that in case he dies before he 
has received the total value of his annuity and pension, the 



Amount of Annual Contributions Increased by 3 Per Cent 
Compound Interest 





Annual 


Annual 


Annual 


Annual 


Year 


Assessment 


Assessn?ent 


Assessment 


Assessment 




S35 


$50 


$75 


$100 


1 


$ 35.39 


$ 50.56 


$ 75.84 


$ 101.13 


2 


71.85 


102.64 


153.96 


205.28 


3 


109.40 


156.28 


234.42 


312.57 


4 


148.07 


211.54 


317.31 


423.07 


5 


187.91 


268.44 


402.66 


536.89 


6 


228.94 


327.06 


490.59 


654.12 


7 


271.20 


387.43 


581.14 


774.87 


8 


314.73 


449.62 


674.43 


899.24 


9 


359.57 


513.67 


770.50 


1,027.34 


10 


405.75 


579.64 


869.46 


1,159.29 


11 


453.32 


647.59 


971.39 


1,295.19 


12 


502.31 


717.58 


1.076.37 


1,435.16 


13 


552.77 


789.67 


1,184.50 


1,579.35 


14 


604.75 


863.93 


1,295.89 


1,727.85 


15 


658.29 


940.41 


1,410.61 


1,880.82 


16 


713.43 


1,019.18 


1,528.77 


2,038.36 


17 


770.22 


1,100.32 


1,650.48 


2,200.64 


18 


828.72 


1,183.89 


1,775.83 


2,367.79 


19 


888.98 


1,269.97 


1,904.95 


2,539.94 


20 


951.04 


1,358.63 


2,037.94 


2,717.27 


21 


1,014.97 


1,449.96 


2,174.94 


2,899.91 


22 


1,080.81 


1,544.02 


2,316.03 


3,088.03 


23 


1,148.63 


1,640.90 


2,461.35 


3,281.80 


24 


1,218.48 


1,740.69 


2,611.03 


3,481.38 


25 


1,290.43 


1,843.47 


2,765.20 


3,686.94 


26 


1,364.54 


1,949.34 


2,924.01 


3,898.68 


27 


1,440.87 


2,058.38 


3,087.57 


4,116.76 


28 


1,519.49 


2,170.69 


3,256.03 


4,341.39 


29 


1,600.46 


2,286.38 


3,429.57 


4,572.76 


30 


1,683.87 


2,405.53 


3,608.29 


4,811.06 



balance shall be paid to his heirs or assigns; and, two, to 
reduce his benefit so that the same benefit or one-half of that 
benefit shall be continued throughout life to his dependents. 
The importance of these options is tremendous for they make 



Teachers' Pension Systems in the United States 

the systems applicable to individual conditions with regard 
to dependents, and involve not only the teachers but also 
the city's contributions. Their introduction in the systems 
of New York and Pennsylvania thus furnishes an important 
precedent. 

Benefits at Resignation or Dismissal. When a teacher 
resigns or is dismissed, before becoming eligible to pension, 
the question arises as to his right to a proportionate part of 
such pension. In "non-contributory" pension systems this is 
generally denied on the ground that pensions are a reward 
for long and continuous service which is of special value not 
compensated for by regular wages, and that it can only accrue 
if the employee remains with the employer during the entire 
working period of his life. 

In systems which are entirely or in part supported by con- 
tributions of employees, the return of such contributions comes 
into question. Where the assessments are low, they are 
frequentl} forfeited on the theory that they are made on the 
straight insurance basis and that the teacher has received 
full value for each year's payment to the fund in the form 
of protection against superannuation or earlier disability. 

Early life insurance organizations abroad and in this coun- 
try, operating upon the "forfeiture" basis, provided life 
annuities to their surviving members by means of the lapses 
of premiums obtained from those members who withdrew 
from the organization through death or otherwise. They 
were generally known under the term "tontine."^ With the 
development of scientific principles of insurance, laws were 

^The Standard Dictionary defines the "tontine" as "a form of life 
annuity" and describes the original tontine as follows : "The income from 
the common fund contributed by the persons composing the tontine is 
divided at first among all, say lOO. When one dies, his share passes, not 
to his heirs as part of his estate, but to the 99 survivors of the tontine, 
and so on continuously, the profit increasing to each survivor as the 
number diminishes, until the final survivor takes the whole, and at his 
death the tontine ceases." The plan owes its name to Lorenzo Tonti, an 
Italian banker of the seventeenth century. 

90 



Death and Withdrawal Benefits 

enacted in almost every state forbidding the operation of 
"tontines," and requiring life insurance companies to pro- 
vide cash surrender benefits to the policyholders whose policies 
were canceled through non-payment of premiums or other 
cause. 

The advantage claimed for the "forfeiture" method in 
connection with pension systems is that it permits the pay- 
ment of higher benefits than could otherwise be provided 
to those who remain in the service for the prescribed period 
and then retire. The objection remains, however, that it is 
inequitable in that it takes money from the unfortunate ones 
who resign or are dismissed or from their dependents in the 
event of death, in order to give it to the fortunate few who 
become eligible to retire. The non-return of contributions 
toward the more or less uncertain contingencies, such as death 
or disability, may have its justifications; but the forfeiture 
of accumulations against dependency in old age cannot be 
logically defended. If adequate provision is to be made 
against this contingency a certain part of the employee's 
wages must be set aside during the entire earning period of 
his life. A teacher leaving a particular educational system is 
still confronted with the necessity of providing for old age, 
which is the most expensive and least uncertain risk he has 
to face. If he forfeits all the accumulations he has made 
he is placed in a particularly disadvantageous position. He 
has to begin anew with a materially increased annual charge 
for the protection sought because of the shortening of the 
period during which accumulations can be made. Unless, 
therefore, the teacher transfers his services to another educa- 
tional system which pays non-contributory pensions or credits 
"outside experience" for pension purposes, he is heavily and 
unjustly penalized. 

This injustice makes difficult the dismissal of incompetent 
employees, since a superior official dislikes to cause his sub- 
ordinates not only the loss of pension but also the loss of their 

91 



Teachers' Pension Systems in the United States 

savings. On the other hand, the argument that forfeitures 
discourage resignations and stabiHze the service is of doubt- 
ful value. Unjust and arbitrary measures may temporarily 
accomplish a given purpose ; but they engender dissatisfaction 
and resentment, the effect of which vitiates the apparent 
advantages. 

That forfeitures of contributions lead to dissatisfaction is 
one of the most tangible lessons derived from a study of 
pension history. Pension systems abroad which have been 
long enough in existence to furnish such lessons had to modify 
their purely routine provisions to conform to principles of 
equity and justice. As a result, the return of employees' 
contributions with accumulations of interest is a rule which 
finds very few exceptions in foreign contributory retirement 
plans. Non-contributory pension systems have resorted to 
the somewhat awkward and expensive alternatives in the form 
of lump sum gratuities or compassionate allowances, or else 
they have changed to the contributory method of support and 
included provisions for refunds. 

The rules of the nineteen analyzed systems which exact 
contributions from teachers are presented in the statement 
on the page opposite. They show that the justice and the prac- 
tical advantage of refunds have not been fully recognized. 
Only four, the Massachusetts, Pennsylvania, Connecticut and 
New York City systems provide for a full return of all contri- 
butions with interest accumulations. Four systems make no re- 
funds. Those allowed in eleven systems in no case include in- 
terest accumulations and frequently amount to only one-half of 
the teachers' contributions. 

Withdrawal and Loan Privileges. In addition to the 
benefits provided at retirement or withdrawal from the serv- 
ice through resignation, dismissal or death, new systems tend 
to extend their benefits to the period of active service. Thus, 
the new system of New York City permits its members to 
withdraw from the fund that part of their accumulations 

92 



Disability Benefits 



Provisions for Resignation or Dismissal 





Return 


3F Contributions in 


Case of 


Pension System 














Death Before 




Resignation 


Dismissal 


Retirement 


States: 








1. Illinois 


One-half, if teacher 


•None 


None 




served less than 








15 years 






2. New York 


None 


u 


u 


3. New Jersey Re- 


" 


" 


a 


tirement Fund 








4. New Jersey 




Non-contributory 




State Pension 




system 




5. Massachusetts . . 


All, with interest 


All, with interest 


All, with interest 


6. Pennsylvania. . . 


All, with 4 per 


All, with 4 per 


All, with interest 




cent interest 


cent interest 




7. Connecticut .... 


All, with interest 


All, with interest 


All, with interest 


8. Minnesota 


One-half 


None 


One-half 


9. Wisconsin 


One-half 


One-half 


None 


10. California 


None 


. None 


a 


11. Virginia 


" 


" 


« 


12. Michigan 


" 


" 


n 


13. Maine 




Non-contributory 
system 










Cities: 








1. New York City. 


All, with 4 per 


All, with 4 per 


All. with 4 per 




cent interest 


cent interest 


cent interest 


2. Chicago 


One-half 


All 


None 


3. Philadelphia. . . . 


None 


" 




i. Cleveland 


One-half 


All, if teacher 
served less than 
20 years; pen- 
sion if teacher 
served more 
than 20 years 


One-half 


5. Boston Perman- 




Non-contributory 




ent Fund 




system 




6. Boston Retire- 


One-half 


All 


None 


ment Fund 








7. Pittsburgh 


' 


Non-contributory 
system 




8. Baltimore 


One-half 


None 


None 


9. Buffalo 


All 


All 


All 


10. New Orleans. . . . 


One-half 


All 


All 


11. Denver 




Non-contributory 
system 





93 



Teachers' Pension Systems in the United States 

which is above the minimum required by law, and to borrow 
from the fund on an assignment of a Hfe insurance poHcy a 
sum not exceeding the loan value of the policy. A member 
is also allowed from time to time to increase or reduce his 
rate of contribution to his savings and annuity account, pro- 
vided he does not reduce it below the minimum rate required 
by law. These benefits may help in various cases of financial 
stringency and make a soundly devised system still more 
applicable to individual conditions. 



94 



CHAPTER VI 

DETERMINING THE COST OF BENEFITS 

The nature of the benefits to be provided by the system 
having been decided upon, the next problem is to determine 
the probable cost of providing those benefits at any named 
date in the future, in order that methods may be adopted to 
insure that an income adequate to meet the computed cost 
may at all times be available. 

Growth of Pension Payments. It is not generally appre- 
ciated that some of the younger members of the force to which 
the system applies will qualify for retirement and for the bene- 
fits promised only twenty, thirty or forty years after the estab- 
lishment of the system and may live thirty or forty years after 
retirement and thus draw their benefits as many as sixty or 
seventy years hence. It is necessary, therefore, that plans for 
the financing of the system look ahead some sixty or seventy 
years into the future. Moreover, it is precisely in the remote 
future that the greatest difficulties in meeting the maturing 
pension obligations present themselves. The annual pension 
payments are very small in the beginning, but grow from year 
to year at an accelerating rate and become exceedingly heavy 
in the future. 

To facilitate an understanding of the proportions to 
which maturing pension claims may grow, it is advisable to 
consider first the case of a single teacher retiring under pro- 
visions frequently found in existing systems. 

A woman teacher enters the service at the age of 25 years 
and remains at her post for a period of 30 years. Then she 
retires at the age of 55 years on a pension of $450, or one- 

95 



Teachers' Pension Systems in the United States 

half of her active salary of $900 per annum. According to a 
recent investigation of the mortality experience among 
teachers, made by the Commission on Pensions of the city 
of New York, a woman teacher retiring on demand at the 
age of 55, unless disabled by accident or disease, has a life 
expectancy of 19.78 years. ^ Assuming that she lives 19.78 
years after retirement, she will draw in pensions a total of 
$8,901. If she received a uniform rate of salary of $900 during 
the 30 years of service, her total active salary would have 
amounted to $27,000. Her total pension payments of 
$8,901.00 would require, therefore, a total outlay of about 
33 per cent of her active salary and a relatively larger per- 
centage if she had started with a small salary and gradually 
been promoted to the $900 she received at the time of retire- 
ment. 

If every teacher in a given service were to retire under the 
conditions specified above, the pension payments of the entire 
system would eventually amount to 33 per cent or more of the 
total pay-roll since the conditions applicable to one unit would 
naturally obtain where there is a collection of the same units. 
If all were to retire after twenty-five or twenty years and some, 
in case of disability even after a shorter period, and if the de- 
pendents of a member were to receive a pension, the pension 
payments would form a still greater proportion of the active 
compensation. But all do not retire. Many resign, or are 
dismissed or die before retirement and forfeit for themselves 
and for their dependents either all or part of their correspond- 
ing benefits. Furthermore, not all who have completed the 
minimum requirements of the system immediately avail them- 
selves of retirement. Many continue in the service for a num- 
ber of years and retire at a later age after which the average 
Hfetime is shorter. Furthermore, the half-pay pension is some- 
times computed on the average salary of the last five years — not 
on the frequently higher amount of salary of the last year — 

'The expectation of life or "average lifetime" of teachers retiring at 
various ages is shown in Appendix 4, table 5. 

96 



Determining the Cost of Benefits 

and it is often limited by a certain maximum amount which it 
cannot exceed irrespective of the amount of salary. All these 
and other factors of similar nature tend to reduce the otherwise 
tremendous ratio of pension paym.ents to salary payments. 
The ultimate pension claims will vary, therefore, in each 
system according to its provisions, its administration and the 
readiness with which teachers avail themselves of their right to 
claim pensions. In the old system of New York City, for in- 
stance, the annual pension payments were estimated ultimately 
to run to more than 20 per cent of the active pay-roll, if the 
old provisions were to be maintained. Many pension systems 
for teachers in this country grant benefits and operate under 
conditions similar to those which obtained in New York City. 
Their ultimate pension charge will be, therefore, in the neigh- 
borhood of 20 per cent of the pay-roll. In pension systems 
with more conservative provisions, such, for instance, as apply 
to teachers of the state of Maine or the city of Baltimore, this 
charge may reach only 15 per cent of the pay-roll. On the 
other hand, a system such as operates in Minnesota and allows 
its teachers the extremely liberal privilege of retirement on 
demand after 20 years of service may eventually be con- 
fronted with annually maturing pension claims running well 
above 20 per cent of the pay-rolls. 

A misleading feature of the financial workings of a pension 
system is the somewhat slow development of maturing claims 
above referred to. 

At the time of establishment of a pension system only a few 
teachers who have completed a long term of service or have 
reached an advanced age are placed on the retired list. The 
annual payments on their account are small in comparison with 
the pay-roll of the active service. There are several reasons 
for this. In the first place those eligible or about eligible to 
retire are the survivors of a comparatively small working force 
of twenty, thirty or forty years ago. In the second place a 
number of more or less old teachers have left the service dur- 

97 



Teachers' Pension Systems in the United States 

ing the years preceding the estabhshment of the system who 
would have continued in the service or would have retired on 
a pension had the system been then in operation, and would 
have eventually qualified for the pension. Finally, the old 
teachers do not avail themselves of retirement as eagerly in the 
beginning of the operation of the system as they do when the 
system is in full swing. Neither do the school authorities force 
them out of the service as freely in the beginning as they do 
when the retirement system has taken deeper roots. Thus, 
many superannuated or disabled teachers remain on the active 
pay-roll drawing full salary just as they did when there was no 
pension system. 

In the fourth place, the retired list in the beginning con- 
tains the survivors of the pensioners retired during the pre- 
ceding year or few years only, whereas when normal operation 
has been reached it contains the survivors of the pensioners 
retired during the preceding thirty or forty years. 

With each succeeding year the number of annual additions 
to the pension list necessarily increases, reflecting the growth 
of the active personnel of years ago, the lesser rate of resigna- 
tion or dismissal among the older teachers and the greater 
readiness of the latter to retire or of the school authorities to 
force their retirement. Each year the number of additions to 
the pension list exceeds the number of terminations of pensions 
through death. Frequently in the beginning the proportion is 
ten additions to the list to one termination, and the resulting 
annual increase in the number of pensioners is as much or even 
greater than 90 per cent, whereas the normal annual increase in 
the population of the community or the school personnel, which 
support the syStem, is only 3, 4 or 5 per cent. Not until sixty 
or seventy years have elapsed does the margin between the new 
crop of pensioners and the deaths among the old become nor- 
mal, since, as already pointed out, it takes about that much time 
for the entire force to which the system originally applied to be 
replaced by a new generation and for the abnormal conditions 

98 



Determining the Cost of Benefits 

described to terminate. Unless in the meantime new factors 
of abnormal growth have appeared, the pension roll will, from 
then on, accurately reflect the growth of the active personnel 
and pay-roll and proceed at the same rate as the latter. Then 
only is reached that period or level of operation of the system 
which is known in pension terminology as "normal." 

The increase in the pension roll and in the percentage ratio 
to the pay-roll is often accelerated and the long period for 
reaching "normal level" is postponed by the liberalization of the 
original provisions of the system : the required length of serv- 
ice is shortened or retirement age lowered, the pension is in- 
creased, or additional disability or death benefits are intro- 
duced. While all such changes increase the cost of the system, 
they naturally involve only small immediate disbursements and 
show their full financial effect only in the distant future. It 
is for this reason that the annual pension disbursements of some 
pension systems abroad, which are more than a hundred years 
old. still continue to grow at a more rapid rate than the pay- 
roll. 

The following examples of tremendous growth of pension 
disbursements as compared with the growth of the pay-roll may 
be cited. These examples are taken from pension systems in 
other branches of service than teachers, as the teachers' pen- 
sion systems are of comparatively recent origin : 

The London Metropolitan Police Pension Fund started 75 
years ago (in 1844) with annual disbursements of about 8 per 
cent of salaries. Its disbursements now equal about 30 per 
cent of the pay-roll. 

The Paris Police Pension Fund, started about a hundred 
years ago with a small pension roll, developed one which in 
1909 amounted to 26.4 per cent of the pay-roll and is now near- 
ing 30 per cent. 

The National Civil Service of France has a pension roll 
which amounted to about 17 per cent of the pay-roll in 1912 
and is now running closer and closer to 20 per cent. 

In the British Civil Service the proportion between the pen- 
99 



Teachers' Pension Systems in the United States 

sion roll and the pay-roll varies in different departments : in the 
Local Government Board it reached 17.8 per cent twenty-five 
years ago; in the Prison Department it amounted to 25 per 
cent in 1903 ; in the Treasury Department to 29 per cent in the 
same year, and in the Customs to 30.6 per cent. 

In the Civil Service of Austria the ratio of pension roll 
to the pay-roll reached 33 per cent in 19 10. Only a small part, 
about one-tenth, of this tremendous pension roll was covered 
from the contributions of the employees. The state was re- 
quired to appropriate annually for civil service pensions an 
amount equal to about 30 per cent of the aggregate salaries. 

Cost as Related to Method of Financing System. 
Viewed purely as a matter of mathematics, it may of 
course correctly be said that the cost of paying a given bene- 
fit, payable at a given time, is absolutely fixed, regardless of 
the method employed for financing the payment when it falls 
due. But from the standpoint of the practical operation of 
a pension system, it is a matter of prime importance to what 
extent the money required for the payment of benefits is 
raised at the time the liability for the payment is first assumed 
and during the period when it is maturing, and to what extent, 
on the other hand, the raising of the money is delayed until 
the liability actually matures. To the extent that a system 
is financed on the first-mentioned plan, it is said to operate 
on the "reserve" basis; to the extent that it is financed on 
the latter plan, it is said to operate on the "cash disbursement" 
basis. It needs no argument here that only in the "reserve" 
method of financing a pension fund are security and fairness 
to be had. 

The cardinal principle of a system operating on the "re- 
serve" basis is that increases in future pension payments are 
anticipated and taken care of before they mature. Each 
teacher is considered a definite obligation against the system 
from the day he enters the service. A "reserve" fund is 
established and built up by means of setting aside for each 
100 



Determining the Cost of Benefits 

teacher, each year during his service, the necessary amounts 
properly calculated and usually expressed in terms of per- 
centage of salary. These amounts, which are secured through 
assessments on salaries or appropriations from public funds, 
or through combined contributions of the teachers and of the 
government, are accumulated at interest. When a teacher 
retires, the "reserv^e" accumulated in this manner on his 
behalf is adequate to pay his pension for the probable dura- 
tion of his life after retirement. In the majority of pension 
systems, teachers forfeit all in the event of death, or part of 
the claim for a proportionate pension if they leave the service 
before becoming eligible to retirement. If such systems are 
operated on the "reserve" method, the saving to be derived 
from such lapses is calculated in advance and utilized for 
the reduction of the required rates of contribution. 

The main advantage of operating a pension system on the 
"reserve" basis lies in the fact that each generation pays 
currently its own obligations. A proportionate part of the 
future pension requirements is set aside each year, and, if 
calculated properly, the pension scheme under such conditions 
is solvent at all times. Hardly less important is the fact that 
a clear understanding of the pension cost is secured by the 
definite and constant relationship which each year's contri- 
bution to the pension fund bears to the same year's expendi- 
ture for active services. Having been accepted as reasonable 
by all concerned, the possibility of arbitrary discontinuance 
or restriction of the scheme and consequent disappointment 
of prospective beneficiaries is avoided. , 

Actuarial Determination of Cost. The determination of 
the probable cost of the benefits obviously involves a compu- 
tation of the probable mortality and disability of the present 
and future members of the fund. Such computations can be 
made accurately only by a trained and experienced actuary. 
In determining the probable income of the fund, too, actuarial 
methods may be necessary. It is to the failure of teachers' 
pension funds in this country to avail themselves of expert 

lOI 



Teachers' Pension Systems in the United States 

actuarial advice, particularly in connection with the cost of 
benefits, that the unsound if not insolvent condition now 
general among them is due. 

It is not the purpose of the present volume to discuss the 
detailed actuarial questions involved in the determination of 
the costs of the several benefits in question. It will be of 
value, however, to point out the principal elements and con- 
siderations which must be taken into account in computing the 
major probabilities of the cost of a pension system. 

In attempting to determine the probable cost of the 
benefits to be provided, the actuary's first task is to 
analyze carefully the personnel records of the service. 
He must then measure the various forces which bear 
on the cost of pensions, and express them in terms of rates 
so that they may be used in calculations. An approximate 
idea of the magnitude of the actuary's preliminary work may 
be formed by examining the following list of rates which he 
would have to prepare from the experience of the service 
itself, or adopt from elsewhere in connection with the cost 
calculations of a typical pension system for teachers : 

1. Rate of withdrawal from service because of resignation. 

2. Rate of withdrawal from service because of dismissal. 

3. Rate of mortality in active service. 

4. Rate of salary increases in active service. 

5. Rate of retirement because of superannuation. 

6. Rate of retirement because of disabihty. 

7. Rate of mortahty after retirement because of super- 

annuation. 

8. Rate of mortality after retirement because of disability. 

Having ascertained these rates, the actuary uses the proper 
rate of interest which may be earned on invested accumula- 
tions and calculates the contributions toward the reserve 
which are required to support the proposed benefits. Under 
the "reserve" method the compound interest factor enters to 
reduce the apparent cost of pensions to more than one-half 
of the apparent cost under the "cash disbursement" plan. All 

102 



Determining the Cost of Benefits 

other conditions being equal, the same amounts are actually 
paid out in benefits under both plans. The pension cost, how- 
ever, is measured under the "reserve" plan by the percentage 
of the pay-roll needed to be set aside currently to secure future 
pensions; whereas such cost, under the "cash disbursement" 
plan, is measured by the percentage which the current pension 
payments form of the annual pay-roll. The first is a constant 
factor while the second is a changing and steadily increasing 
fact or } 

To facilitate an appreciation of the cost-reducing effect of 
the interest factor in pension calculations, an illustrative 
retirement case may be used. A woman teacher retires at the 
age of 55 years on a pension of $450, lives 19.78 years there- 
after — the average life time of a woman pensioner of her age 
— and draws a total of $8,901.00 ($450 x 19.78) in pensions. 
Under the "reserve" method of providing pension payments, 
only $5,773.50 ($450 X 12.83)- need to be on hand at the date 
of her retirement, which sum, together with interest accumu- 
lations at 4 per cent ($3,127.50), would be sufficient to pay 
the annual instalments of $450, totaling about $8,901.00.^ 

Going back a step further, the same interest-reducing effect 
of the resers^e system is reflected in the amount of the annual 
or other periodical contributions required during the period 
of active service to insure the required amount being on hand 
at the time of retirement. Thus, in the case just cited, it is 
necessary, as stated, to have in the reserve at the time of 
retirement, $5,773.50. Yet all that is required to secure this 

^This definition of the difference between the two methods, which has 
been adopted in the reports of the Carnegie Foundation (Bulletin 9) and 
the Illinois Pension Laws Commission, originally appeared in the report 
of the N. Y. Bureau of Municipal Research on the Police Pension Fund 
of the City of New York (1913), and the Report of the New York (City) 
Commission on Pensions on the Teachers' Retirement Fund (1915). 

^Under the "reserve" method, the amount needed to be in hand for a 
beneficiary of a given age at the date of retirement to pay a pension of 
one dollar during life time is first calculated. This amount is called an 
"annuity value." For women teachers of New York City retiring at age 
55 on a service pension, it was determined to be $12.83. See Appendix 
4. table 3. 

103 



Teachers' Pension Systems in the United States 

reserve is an annual contribution of about $98.98 for each 
of the 30 years of the pensioner's active service — a total of 
$2,969.40. The difference — $2,804.10 — would be made up 
by the interest, compounded at 4 per cent. If it be assumed 
that the teacher receives a uniform salary of $900 during her 
entire service, the annual contribution of $98.98 would amount 
to about II per cent of her salary. In the case under dis- 
cussion, therefore, the interest factor reduces the cost of the 
pension from 33 per cent under the cash disbursement system, 
to II per cent under the reserve method. 

The Problem of Accrued Liabilities. "Accrued liabili- 
ties" are a rock upon which many a teachers' pension system 
has split. System after system has been established with a 
rate of contribution based upon the minimum period of service 
required for a pension, without it being appreciated that only 
those entering the service after the adoption of the system 
would contribute to it for the whole of that period. 

In applying their benefit provisions to the teachers in service 
at the time of establishment of the system, who have been 
in the service for varying numbers of years prior to the 
establishment of the fund, all the retirement funds allow full 
credit and pay benefits for such previous services, although 
no contributions were then made and no fund was then in 
existence. The greatest difficulty of course presents itself in 
the case of the older teachers, who have a long period of 
service to their credit, and who apply for a pension from 
the fund immediately or a short time after they have joined, 
and in whose cases the fund must be able to make immediate 
payments. If we take the case of an old teacher, who has 
30 years of prior service to his credit and would retire five 
years after the establishment of the system on a pension of 
half -pay, we find that a contribution made for five years at 
the rate of 15 per cent of salary will produce only approxi- 
mately a seventh of the cost of his benefit. Part of the re- 
mainder may be supplied from the forfeited contributions of 

104 



Determining the Cost of Benefits 

other members, if the system is based on lapses, but the bulk 
of it represents a deficiency. 

With the younger teachers the problem is less difficult. 
The younger they are the shorter their term of prior service 
and the longer they must contribute in the future before 
applying for retirement and drawing a pension. 

Suppose an actuarial investigation shows that 2,000 out 
of 8,000 "present members" of the system would, at some 
time or other, apply for the pension. Each of the 2,000 would 
have some period of prior service to his credit and represent 
a certain deficiency on that account. If the average deficiency 
is estimated, say, at $2,500 for each prospective pensioner, 
the total deficiency on this account, or "accrued liability" as 
it is frequently termed, would amount to $5,000,000. 

The majority of the retirement funds in the United States 
have been established without sufficient calculation of the 
cost of the "accrued" liabilities which they have thus assumed. 
Only a slight difference or no dift'erence at all is made 
between the new entrants and the members already in the 
service at the establishment of the system. 

The accrued liabilities begin to mature immediately after 
the establishment of the systems. Each year a new proportion 
of these "accrued liabilities" is presented for payment. And 
the paymeuts from the fund ouj this account constantly 
accelerate during the first thirty years or more of its operation. 
The persons responsible for the establishment of the unscien- 
tific systems seldom realize the fact that since the fund accepts 
the liabilities accrued from a period when it was not yet in 
operation but receives no equivalent assets from this period, 
it starts with an actuarial deficiency. Outside of the payment 
of small arrears, which practically have no effect on the prob- 
lem, they have taken no steps to offset this deficiency. The 
method of these systems is to ignore the initial deficiency and 
to shift it upon the future, from which they borrow without 
repaying. This procedure has brought many systems to grief. 

105 



Teachers' Pension Systems in the United States 

No estimates of their "accrued liabilities" were made by 
these systems at the time of their establishment. The immense 
proportions of these liabilities remained unknown. All these 
systems in providing that the benefits in respect to prior 
services should be paid from the current revenues of the fund 
have prepared the way for insolvency both with regard to 
accrued liabilities and the liabilities on account of subsequent 
services. 

No attempt has ever been made in these systems to ascer- 
tain how long they will be able to pay the "accrued liabili- 
ties" from their current revenues. But they proceed as though 
they expect to be able to do so indefinitely. They pay as 
long as they have available cash and give no thought to the 
future. They did not realize at the time of their establish- 
ment that these payments would increase each year and reach 
tremendous amounts far in excess of their current revenues. 

During the first few years they are encouraged in their 
supposition. Few retirements are made and the payments 
are inconsiderable. They do not realize that the average 
teacher lives from twelve to twenty years (according to age 
and sex, as shown in Appendix 5 after retirement, and that it 
will take many years before the new payments accruing each 
year on account of the past will be equaled by terminations. 
They fail to consider that until this climax is reached the 
payments will increase from year to year and by the time 
they have begun to decline the payments due the new entrants 
will then have grown considerably, and they do not foresee 
that it will take no less than sixty or seventy years or even 
longer before the last of the old entrants will die and the final 
portion of "accrued liabilities" thereby be discharged. 

With each year the disbursements which increase on account 
of the maturing "accrued liabilities" require a greater portion 
of the current revenues. With each year a smaller balance 
goes to the fund and the interest earned is, therefore, rela- 
tively smaller. Presently the disbursements exceed the 
106 



Determining the Cost of Benefits 

revenues and draw upon the balance of the fund which then 
becomes bankrupt. The pensions already granted are reduced 
and no new pensions are allowed. This usually happens be- 
fore the disbursements on account of past services have 
reached their climax. The bankrupt fund still has on hand 
the greater proportion of the "accrued liabilities" undis- 
charged. 

Discussion of the methods which should be employed for 
meeting the problem of accrued liabilities is reserved for a 
subsequent chapter (Chapter VIII). 

Inadequacy of Contributions in Existing Systems. De- 
spite the fact that the cost-reducing effect of compound inter- 
est is greater than is commonly appreciated by the framers 
of pension systems, the rates of contribution fixed by them 
have almost invariably been inadequate to meet the liabilities 
incurred. All the existing systems, except those of Massa- 
chusetts, New York City, Pennsylvania and Connecticut, were 
established without estimates of the cost of benefits and with 
revenues which were inadequate to assure their permanent 
operation. 

In eight of the twenty- four systems selected for study the 
revenue from the contributions of the teachers and the govern- 
ment amounts to only 2 per cent of salaries or even less. In 
five systems the revenue from contributions amounts to more 
than 2 per cent of salaries but less than 3 per cent. In Wis- 
consin about 10,000 teachers are assessed i per cent and only 
1,400 teachers 2 per cent, so that the total contributions of 
teachers, amounting to $64,000, are slightly more than i per 
cent; the. state contributed from the tax $66,000 in 191 6, 
or also slightly more than i per cent. In the systems of 
California, Illinois, Minnesota and Denver the exact ratio 
between the amount of revenue and pay-roll is not available 
but it can be safely estimated as not exceeding 3 per cent. In 
the systems of Chicago and Cleveland the revenue is between 
107 



Teachers' Pension Systems in the United States 

3 per cent and 4 per cent. In Chicago the teachers and the 
city contribute about 1.4 per cent each or about 2.8 per cent 
together, but the city may under the statute contribute twice 
as much as the teachers. 

The systems of Massachusetts, New York City, Pennsyl- 
vania and Connecticut are the only systems which have a 
revenue bearing a greater ratio to salaries than 4 per cent. 
Their revenues range from 7 per cent to 13 per cent as shown 
below. 

The inadequacy of contributions in the majorit)^ of the 
existing systems to provide the benefits promised may be 
ascertained by comparing them with the contributions and 
benefits of systems which have made reliable estimates of cost. 
The table on the following page presents the contributions and 
benefits of the four scientifically constructed systems. 

In the table on page 1 1 1 the attempt is made to compare the 
provisions of the Massachusetts system with the other sys- 
tems of the country (except the three other scientifically con- 
structed systems already mentioned). Of the two funds of 
which the Massachusetts system consists, which are financially 
independent and which pay different benefits, the annuity 
fund is better suited for a comparison, since it is based on 
more reliable estimates and is more widely differentiated from 
the other systems than is the pension fund. 

The amount of contributions is expressed differently in 
every fund. In some funds the annual contribution which 
each member pays is expressed in dollars and cents ; in others 
as a percentage of salary; in some of the systems the rate is 
uniform throughout the period, whereas in others it varies 
according to length of service. A further complication arises 
from the fact that in a number of systems the government 
contributes annually a certain subsidy expressed in thousands 
of dollars. These complications make an accurate comparison 
impossible, but a general comparison may be made by reducing 
the various forms of contributions to a uniform basis. In the 

108 



Determining the Cost of Benefits 



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109 



Teachers' Pension Systems in the United States 

table on the following page they are expressed as a percentage 
of salaries of the teachers in the respective systems. 

The result given under the first head shows that while in 
the Massachusetts Annuity Fund the contributions amount 
to 5 per cent of salaries, in other funds they total only 2 per 
cent to 3 per cent. Furthermore, in Massachusetts the entire 
5 per cent contribution is deposited in the fund, in the other 
systems only the unexpended balance of the contribution is 
deposited. The expenditures in these systems, as shown in 
the previous chapters, increase rapidly, the portion which goes 
to the fund becomes smaller each year until finally all the 
contributions are expended and no contributions are left to 
be carried to the fund.^ Thirdly, the difference in contribu- 
tions is emphasized on account of the compound interest 
factor. The large contributions in Massachusetts earn interest 
on the entire amount. It increases on that account alone by 
more than one-half within thirty years. On the other hand 
the small contribution in other systems draws interest only 
on the portion which is deposited and which decreases from 
year to year. The fourth point shows that whereas in Massa- 
chusetts, in the case of the average member, thirty contribu- 
tions must be made, in other systems frequently only twenty- 
five are required. 

The second half of the table shows the extent to which the 
benefits paid from the other funds are higher than those paid 
from the Massachusetts Annuity Fund. Thus, under the 
fifth point, the Massachusetts fund pays only benefits with 

'The rapid decrease of the portion deposited each year is caused by 
payments of benefits for services rendered previous to the fund's estab- 
Hshment. The following chart which relates to the Philadelphia fund 
illustrates this decrease. 

Portion of the Annual Contribution 
Year of Operation Deposited in the Fund 

ist 91.5 per cent 

3d 64.5 

5th 48.4 

7th 41-3 

9th 36.4 

A number of funds have already reached the point where the entire 
annual contribution has to be expended. 

IIO 



Determining the Cost of Benefits 



A Summary Comparison Between the Massachusetts System and Other 

Systems (except New York City, Pennsylvania 
AND Connecticut) 



Systems Other Than 
Massachusetts (ex- 
cept New York 
City, Pennsylvania 
and Connecticut) 



Massachusetts System 



Annuity Fund 
(on a reserve basis) 



Pension Fund (on a 

cash disbursement 

basis) 



I — Contributions 

1. The amount of 

the total annual 
contribution 
from the teach- 
ers and govern- 
ment expressed 
as percentage of 
salary 

2. Is the entire con- 

tribution depos- 
ited in the fund 
or only part? 

3. Is interest earned 

on the entire 
contribution or 
only on a part? 

4. How many con- 

tributions are re- 
ceived on ac- 
count of an in- 
dividual teach- 
er before he re- 
tires? 

II— Benefits 

5. Are benefits paid 

for both pre- 
vious and sub- 
sequent services? 

6. What is the av- 

erage amount of 
benefit? 



7. How early can 
the benefit be 
granted? 



8. What is the aver- 
age number of 
annual pay- 
ments which the 
fund must make 
to a retired 
teacher before 
he dies? 



2 per cent to 3 
per cent of sal- 
ary 



Part 



On the deposited 
part 



25 or 30 



Previous and sub 
sequent 



salary' 



In most of the 
systems at any 
age provided 
served 25 or 30 
years 

If retired at age 
50 or later: to 
women 23 pay- 
ments or less; 
to men 16 J^ 
payments or 



5 per cent of 
salary 



All 



Increasing 
centage 



None 



per- 



Onall 



Until age 60, on 
the average 
about 30 con- 
tributions 



Only subsequent 



Less than }4, sal- 
ary at present, 
}4 salary in the 
future 

Not before age 
60 



None 



None before re- 
tirement, pay- 
ments by the 
state begin from 
the date of re- 
tirement 



Previous and sub- 
sequent 



More than J^ sal- 
ary at present, 
]4 salary in the 
future 

Not before age 60 



If retired at age 60 or later: to 
women 161^ payments or less; 
to men 12.7 payments or less 



^ In systems which provide the same amount of benefits for all salaries, it 
usually equals about one-half of the average salary of all teachers. 

Ill 



Teachers' Pension Systems in the United States 

regard to services rendered subsequent to the establishment 
of the fund ; all the other systems pay benefits with regard to 
both previous and subsequent service. The cost which these 
funds must meet on account of previous service, as explained 
in the preceding section, is tremendous. 

The sixth head shows the average benefit paid from the 
annuity fund in Massachusetts to be less than one-half that 
paid by other funds. It is very low during the beginning of 
the fund's operation but gradually increases until it reaches, 
after approximately thirty years, about one-fourth of the 
salary, at which point it remains. In sharp contrast the aver- 
age benefit in other funds amounts to one-half salary immedi- 
ately after the establishment of the fund. 

Again, under point seven, it is shown that while in Massa- 
chusetts the benefit cannot be paid before 60 years of age, 
in the other systems it can be paid at any time, provided the 
teacher has served for 25 years. The significance of the 
retirement condition in these sytems is made clear under point 
eight. The number of payments which the fund has to make 
in case of early retirement is considerably greater than in 
the case of retirement at a late age; a woman teacher on the 
average receives her pension during twenty- three years if 
retired at age 50, during sixteen and a half years if retired 
at age 60, and during less than thirteen and a half years if 
retired at age 65. The cost of benefits in the systems allow- 
ing early retirement is, therefore, considerabl}^ higher than 
the cost of benefits in the Massachusetts Annuity Fund, which 
provides them only after age 60. 

All these points prove that the funds which receive lower 
contributions and earn little interest are providing far more 
costly benefits than the fund which receives twice as large 
contributions and earns considerable interest. It is evident 
that the cost of retirement benefits has either been considerably 
overestimated in the Massachusetts fund or grossly under- 
estimated in other funds. Since the Massachusetts rates are 

112 



Determining the Cost of Benefits 

based upon mortality investigations and minute actuarial cal- 
culations, while others are not, the conclusion must be made 
that the latter have committed the grave error of providing 
utterly inadequate revenues. 

The conclusion as to the inadequacy of contributions in the 
existing systems is confirmed by the experience of the old 
fund of New York City, and of the funds of Boston, Virginia 
and others in which the insufficiency of revenues has necessi- 
tated either a reduction of benefits, a discontinuance of 
granting new retirements, an increase of contributions, or 
a fundamental reorganization of the entire system. In some 
of these systems the insufficiency appeared after two or three 
years of operation; in others only after fifteen or even twenty 
years. Their experience tends to show that with the present 
rate of contributions none of the existing funds could operate 
for more than about thirty years without exhausting their 
revenues, and that in most of these systems the revenues 
would be exhausted after a shorter period. 

Estimating the Liabilities of a Going System. In the 
reorganization of an unscientific system and the transition 
to a scientific system there is presented the special problem 
of determining the liabilities against the fund already incurred. 
This may conveniently be done by considering separately 
the liabilities incurred on behalf of persons already on the 
retired list and those incurred on behalf of the persons still in 
active service. At the time of reorganization of the New 
York City fund the liabilities on account of the approximately 
1,500 pensions then outstanding amounted in round figures to 
$10,840,000.^ A special contribution was provided for their 
liquidation. 

Next the accrued liabilities on account of the prior services 
of the active members are valued. Their amount depends 
on the rate of benefits which are allowed for prior services. 

'It consisted of two elements: liability for service pensions amounting 
to $8,886,500 and liabilities for disability pensions aggregating $1,953,600. 

"3 



Teachers' Pension Systems in the United States 

A special method is provided for their liquidation. They 
are not allowed to drain the funds from which other liabili- 
ties should be discharged. The new system of New York 
City provided a pension of one one-hundred-fortieth of the 
average salary of the last ten years for each year of prior 
service and assumed thereunder a liability of almost 
$16,655,000, about four-fifths of which was for superannua- 
tion benefits and one-fifth for disability.^ It made a provision 
for their discharge which assured the solvency of the fund. 

The liabilities on account of pension benefits for subse- 
quent services of "present members" represent the third im- 
portant item in the cost of a sound system. The scientific 
systems in this country have divided this benefit into two 
parts : one called "pension" and supported by the contributions 
of the government, and the other called "annuity" and sup- 
ported by the teachers themselves. The liability of the gov- 
ernment under the "pension" part of the benefits is shown 
separately from the liability assumed by the teachers toward 
their own annuity. The "pension" liability may consist of 
several elements according to the benefits which are provided. 
In the new system of New York City this liability was esti- 
mated at about $36,000,000 and its elements were as follows : 
superannuation pensions for subsequent services, $28,404,000; 
disability pensions for subsequent services, $7,176,000; death 
benefits of six months salary to dependents of present teachers 
who die after becoming eligible for a pension, $356,000. To 
cover the cost of these benefits and the liabilities involved 
thereunder, a special contribution was devised. 

An actuarial balance sheet does not show the liabilities 
which will appear on account of the new (or future) entrants 
to the service. However, the cost of their benefits, as already 
stated, is carefully calculated and a provision is made for 
adequate contributions to be made currently by them and on 
their behalf into a reserve fund during their active service. 

'$13,405,700 for superannuation and $3,249,200 for disability. 
114 



Determining the Cost of Benefits 

These contributions are not used for the discharge of any 
other except their own liabiHties. Thus, in admitting new 
members and assuming new liabilities the system at the same 
time receives an equivalent item of new assets. Its continued 
solvency is thus assured. 

Certain other liabilities may be involved in a system, such 
as those connected with the cost of administration of the 
system, the maintenance of a certain rate of interest, and 
the guarantee of the solvency of the system. Their nature is 
described in the chapter on the contributions of the govern- 
ment, in which the various forms of contributions and methods 
of covering the different liabilities here indicated are dis- 
cussed. 

Cost and Liabilities Involved under Different Benefits. 
A considerable difference in the cost of benefits and the amount 
of liabilities of the system may result from an apparently 
slight change in the nature, amount and conditions of benefits 
to be granted. Great caution must, therefore, be exercised 
in this matter. The following may serve as an illustration. 
The old fund of New York City provided after 30 years of 
service a pension of one-half of the final salary of the teacher. 
The liability under this benefit to teachers in the service on 
June 30, 1914, was estimated at $49,643,000. The city pro- 
posed to raise the requirements and reduce the pension as 
follows: retirement at age 65 on a pension of one-eightieth 
of the average salary of last ten years for each year of service. 
The liability under this benefit was estimated to be only 
$40,862,000. A cut of $9,000,000 would have been effected 
had this change of benefit been adopted. As the teachers 
objected to such provision, a compromise scheme was sug- 
gested according to which retirement would take place after 
35 years of service on a pension of one-seventieth of the 
average salary of the last ten years for each year of service. 
This benefit involved a liability of $46,806,000, i. e., about 
three millions less than the cost of the benefit then provided, 

115 



Teachers' Pension Systems in the United States 

but six millions more than the benefit proposed by the city 
would have cost. 

In deciding upon the nature of benefits to be provided 
and the contingencies to be covered, the framers of a system 
must have before them estimates of the cost and habilities 
involved under various benefits, because otherwise they may 
provide such costly superannuation benefits as will leave no 
resources for making adequate provision against other con- 
tingencies. A better proportion between the provisions against 
different contingencies may be established if the cost of the 
different provisions is known. It is interesting to compare 
the old system in New York with that proposed in 1916 with 
reference to the distribution of their cost as between different 
benefits; for while the total costs of these two systems were 
about equal (approximately $70,000,000), the distribution of 
the costs was different. The old system provided exceedingly 
high and costly superannuation and disability benefits and 
at the same time provided no withdrawal benefits whatsoever 
in case of resignation or dismissal, or to the dependents in 
case of death. The proposed plan reduced the superannuation 
and disability benefits to a more reasonable rate and thus 
effected a saving of about $5,000,000, which it applied to the 
providing of withdrawal benefits for the cases of resignation, 
dismissal or death, i. e., of benefits which are of value especially 
to the younger teachers. 



116 



CHAPTER VII 

THE DIVISION OF COST BETWEEN GOVERN- 
MENT AND TEACHERS 

So long as the opinion prevails that a contribution of i per 
cent or 2 per cent is sufficient to provide retirement benefits, 
the question as to who shall pay it is comparatively unim- 
portant, because the teachers and the local or state govern- 
ment are not opposed to contributing it. Sometimes the 
teacher assumes the payment of such contribution without the 
assistance of the government, at other times the government 
undertakes to pay it alone. At most times, however, the 
teachers and the government divide the small contribution 
between themselves. 

The "easy-going" attitude of the teachers and the govern- 
ment towards contributing changes, however, as soon as the 
high cost of retirement systems is realized and higher con- 
tributions required. When a deficiency in one of these funds 
appears, the teachers demand that the government shall cover 
the deficiency and contribute at a higher rate, whereas the 
government seeks to increase the contributions of the teachers. 
When a reliable investigation of the cost of a sound retire- 
ment system discloses the fact that it requires a contribution 
in excess of 10 per cent of salaries (including the deficiency), 
the question of division of that cost becomes of paramount 
importance. The cost is too great to be borne either by the 
teachers alone or by the government alone. 

After some consideration it becomes apparent that the cost 
must be divided between the two parties. Here the difficul- 
ties begin, for each party seeks to assume a smaller portion 

117 



Teachers' Pension Systems in the United States 

of the cost. The teachers frequently may agree to contribute 
an additional i or possibly 2 per cent of salaries, but they 
object to contributing more. On the other hand, the govern- 
ment may agree to relieve the teachers of the payment of 
the entire or the major part of the deficiency with respect to 
previous services which often amounts to millions of dollars,^ 
but it frequently refuses to assume any considerable part of 
the cost with respect to future services. 

The discussion of specific terms of the division of cost 
gains a great deal in clearness, and an agreement is sooner 
effected if the philosophy of each of the methods or systems 
mentioned is understood. In order to facilitate such an under- 
standing a brief discussion of the philosophy of each of these 
methods is herewith presented. 

The Wholly Contributory System. Some teachers pre- 
fer the wholly contributory system because it assures them 
greater control over their fund. There remains, however, 
the opposing argument that it imposes a burden which the 
teachers are not able to bear. This argument bears with dif- 
ferent force upon those who are in service at the time of the 
establishment of the system — the so-called "present teachers," 
— and those who enter later — the "future (or new) entrants." 
Upon the former the high cost is most keenly felt, for if con- 
tributions be determined upon a proper actuarial basis, that 
is, graduated according to age, the periodical sums to be paid 
by the older members are necessarily very large. Even in 
the case of the younger members it is necessary to exact sums 
in excess of 5 per cent of their salaries; whereas, in the case 
of the older teachers, this percentage must rise as high as 
25 per cent or even 50 per cent; and, in the case of the very 
old teachers, the contributions would need to be actually more 
than 100 per cent of their current salaries. 

As applied to new entrants the wholly contributory system 

^The deficiency in the New York Citjf fund was estimated in 1915 at 
$56,000,000. 

118 



Division of Cost 

is not so clearly impracticable and is indeed feasible, though 
there would still remain the necessity of graduating contri- 
butions according to the respective ages of the entrants. In 
practice, however, it is not practicable to establish a system 
to include only those persons who may thereafter join the 
teaching force, leaving the then existing force unprovided 
for, or to be taken care of by a system of government aid. 
The result would be that while the new entrants were meeting 
the entire expenses of the retirement systems, their colleagues 
would have their fund in part supplied from the public purse. 
This would be equitable only if the new entrants were in 
receipt of proportionately higher salaries. This device, how- 
ever, has never been tried, the objections to it being clearly 
apparent. 

In effect, then, it may be said that the wholly contributory 
system is impracticable. 

The Non-Contributory System. The older as well as the 
younger teachers favor the non-contributory system, but for 
different reasons. The older teacher is greatly interested in 
retirement benefits from which he expects soon to benefit and 
which he regards as deferred payments for faithful public 
service. The younger teacher is not so much interested in 
the matter and desires to use his entire salary for his immedi- 
ate needs or wants, and, if provision is to be made for pen- 
sions after superannuation, is, therefore, inclined to insist 
that it be provided by the government, and thus to. join hands 
with the older teachers upon whom a contributory system 
would impose a very heavy burden. 

The objections, however, to the wholly non-contributory 
system are several in number and of weight. 

In the first place, it almost necessarily means a system over 
whose management and specific provisions the teachers them- 
selves are given little or no control, for it is not to be expected 
that the government which bears its entire cost will be willing 

119 



Teachers' Pension Systems in the United States 

to surrender its management and direction. The result from 
this is that those features are emphasized which the govern- 
ment, as the employer, deems of primary importance to the 
public service, as distinguished from those features which 
have immediate regard to the personal welfare of the teachers 
themselves. Thus, for example, under non-contributory sys- 
tems, benefits at resignation or dismissal which are essential 
to the freedom of the teachers are not usually provided for, 
and the supervising authority is able to hold over the heads 
of his employees the threat of a forfeiture of all benefits in 
case of resignation or dismissal. 

The further argument can be made against non-contributory 
systems that they eventually become contributory systems 
but in a disguised form, and one under which the burden is 
shifted to an inequitable degree upon the younger members. 
This change is brought about b}^ the granting of an increasing 
number of gratuities with a result that, to meet their cost, 
salaries are lowered or at least prevented from being increased. 
The experience of the British Civil Service which has a non- 
contributory system supports this view. 

Germany still maintains a non-contributory system for its 
teachers, but it is worthy of note that all of its systems of 
social insurance — for old age, sickness, invalidity, death, etc. — 
are founded upon the contributory principle. 

Regarded from the standpoint of the government, the 
objection to the non-contributory system is of course that it 
makes a heavy demand upon the public purse. 

In general, it may be said that when we view pension sys- 
tems generally, at home as well as abroad, the tendency to 
abandon the non-contributory principle is clearly apparent. 
The objections to its use are too great to be successfully 
overcome. 

The Joint or Partly Contributory System. Sound finan- 
cial as well as social considerations support the principle 



Division of Cost 

that the teachers and the government should unite in support 
of retirement systems. As earher shown, the philosophy 
of all pension systems for public employees is founded upon 
the fact that there is a community of interest between the 
public, which is the employer, and the prospective beneficiaries, 
who are the employees. That is, the welfare of the latter 
makes it possible to build up a more efficient administrative 
force, to establish a better cooperg.tion and maintain an im- 
proved esprit de corps. And, as experience shows, where the 
management of the system is divided between the government 
and the members of the system, more cordial and better work- 
ing methods are maintained. 

A clearer distinction between the question of wages and of 
pensions is also promoted. The contributions by the members 
of the system are not viewed by them as pro tanto reductions 
of their wages, nor are the pensions regarded by the govern- 
ment as gratuities upon its part. In other words, the pensions 
paid are seen to be partly personal savings and partly deferred 
payments for services rendered. As thus viewed, it becomes 
feasible to make adequate provision for their permanent pay- 
ment. The funds can be drawn from a double source and the 
payments for their replenishment equitably apportioned. 

In submitting the first reorganization scheme prepared by 
the New York City Commission on Pensions, Mr. Bruere, the 
Secretary of the Commission, wrote : 

It would be easy to submit for the consideration of authori- 
ties and taxpayers generous pension plans which place the 
entire cost upon the city. It does not require much wisdom 
to appreciate the folly of such a course. Not only would the 
immediate cost be burdensome, but it would presently become 
so onerous that unquestionably benefits would be curtailed. 

If it be to the interest of the city that provision be made 
for the retirement of superannuated employees, it is of greater 
interest to the employees themselves who are the beneficiaries 
of the retirement plan. But merely from self-interest, and 
without regard to questions of propriety and justice, em- 
ployees should welcome any means which will ensure the 

121 



Teachers' Pension Systems in the United States 

permanency of a plan established, and remove from the possi- 
bility of doubt their receipt of pensions when the time comes 
for them to claim them. 

With these considerations in view the plan suggested in 
this report for reorganizing the teachers' retirement fund 
places equally upon the teachers and the city, with one qualifi- 
cation in favor of the teachers, later discussed, the cost of 
future benefits. The cost of these future pensions will be con- 
siderable if they are to be as adequate as they should be from 
the standpoint of efficiency and humanity. 

In summary, then, we arrive at the following conclusions: 

The wholly contributory system is financially impracticable 
and founded upon an inadequate pension philosophy, since it 
has regard only for the welfare of the pensioners to the 
exclusion of the social and administrative interests that are 
involved. 

The non-contributory system also is financially impracti- 
cable; is inequitable as between the older and younger mem- 
bers; excludes the beneficent savings principle upon the part 
of the members ; tends to disregard certain desirable forms 
of relief, and leads to autocratic methods of operation. 

The joint contributory system is financially feasible; it can 
be so organized and operated as to distribute costs equitably 
as between the public and the members, and between the dif- 
ferent groups of members; it provides the various kinds of 
benefits that are needed; it harmoniously combines social 
insurance with individual savings, and it makes possible joint 
management and cordial cooperation between the members 
and their administrative superiors. 

The Division of Cost between Teachers and Govern- 
ment in Existing Systems. The table on the following page 
presents in summary form the chief facts relative to the divi- 
sion of cost between the teachers and the government in exist- 
ing systems in this country. 

122 



Division of Cost 

Division of Cost Between Teachers and Government in Existing 
Systems 

Wholly Contributory Systems Number of Teachers Covered 

Michigan 18,583 

New Orleans, La 1,294 

Louisville, Ky 883 

Total 20,760 

Non-Contributory Systems 

State Systems 

Maine 6,965 

Maryland 4.277 

New Hampshire 3.083 

Rhode Island 1,484 

Arizona i,539 

Total Under State Systems 17,348 

Local Systems 

Pittsburgh, Pa 2,405 

Denver, Colo 1,095 

Atlanta, Ga 795 

Charleston, S. C I57 

Columbus, Ga 113 

Brookline, Mass 196 

Total Under Local Systems 4.761 

Total 22,109 

Joint or Partly Contributory Systems 

With the exception of the foregoing systems, all the systems listed 
in Appendix 2 are of the joint or partly contributory type. 

Number of Systems No. of Teach- 

Recapitulation State Local Total ers Covered 

Wholly contributory systems 123 20,760 

Non-contributory systems... 5 6 li 22,109 
Joint or partly contributory 

systems 16 64 80 289,685 

22 ^2 94 332,554 

Special attention may be called to the systems in operation 
in Boston and the state of New Jersey. The teachers in each 
of these systems are eligible to retirement from two separate 
funds, one entirely supported by salary deductions, the other 
financed exclusively from public moneys. The combined 
operation of both funds is similar in effect to a single con- 
tributory system and has been treated as such in the fore- 

123 



Teachers' Pension Systems in the United States 

going tabulation/ A similar situation exists in Rhode Island, 
where the teachers of Providence, Newport and Bristol may 
receive benefits from their local contributory funds and at the 
same time receive pensions from the non-contributory system 
of the state. 

Out of the twenty-four systems selected for special study, 
only Michigan and New Orleans are of the wholly contribu- 
tory type. Maine, Pittsburgh and Denver are non-contribu- 
tory, whereas the other nineteen systems are of the joint or 
partly contributory type. 

The joint contributory system of Massachusetts, adopted 
in 1913, is worthy of special note because of the high rate 
fixed for the contributing of the teachers — 5 per cent. This 
rate, which is higher than the rate in any other system in this 
country, "seems to meet with the approval of practically all 
the members of the Retirement Association."^ The state con- 
tributes to the teacher's retirement benefit an amount equal to 
that which his contributions purchase, and in addition assumes 
payment of all benefits for services rendered previous to the 
establishment of the fund (which constitute a deficiency), 
without requiring any back contributions on the part of the 
teachers. The state thus accepts its share of cost although on 
account of the latter payments that share will be larger than 
that of the teachers. 

'The new system of New Jersey, which supersedes the two old sys- 
tems, is of the joint contributory type. 

"Massachusetts Teachers' Retirement Board, Bulletin No. 2. p. 6. 



124 



CHAPTER VIII 

THE GOVERNMENT'S CONTRIBUTION 

Determination having been made of the basis on which the 
cost of the pension system shall be divided between the gov- 
ernment and the teachers, special questions as to amount and 
method of financing arise with respect to the contributions 
of both parties. To a consideration of these special problems 
the present and the succeeding chapters are devoted. In this 
chapter are considered the questions involved in determining 
the size and character of the government's contribution. 

Various Elements Determining Amount of the Govern- 
ment's Contribution. Those who have had most experience 
in framing scientific pension systems make a careful distinc- 
tion between the different kinds of obligations assumed by 
the government. Each of these types of obligation involves 
special features which must be given weight in determining 
the amount which the government shall set aside from year to 
year to meet these obligations as they mature. The govern- 
ment's contribution is therefore to be regarded as the com- 
posite of several different contributions, each of which is to 
be constructed in accordance with the nature and amount 
of the particular liability to the support of which it is applied. 
The elements constituting the contribution may be classified 
as follows : 

1. Contribution supporting an already existing pension roll. 

2. Contribution towards the pensions of present members 
for their prior services (accrued liabilities). 

3. Contribution towards the pensions of present members 
for their subsequent services. 

4. Contribution towards future pensions of new entrants. 

125 



Teachers' Pension Systems in the United States 

5. Contribution towards administrative expenses. 

6. Contribution towards the maintenance of a certain rate 
of interest and the guarantee of the solvency of the system. 

Contribution Supporting an Already Existing Pension 
Roll. Where an old system is discontinued and a new system 
introduced in its place, the new system must take over the 
pension roll of the former and devise a special contribution 
from which the old pensions can be paid. The peculiar nature 
of the old pension roll is that it decreases from year to year 
as the old pensioners die. In New York City, on June 30, 
1914, there were about 1,521 old pensioners and the annual 
pension roll aggregated about $1,185,000 and represented a 
total liabiHty of about $11,600,000. During the following 
four years about 150 pensioners died and the annual pension 
roll on their account decreased to about $1,070,000. 

Since the annual payments under this obligation decrease, 
there is no reason for providing a reserve against the future 
payments on that account. The contributions can, therefore, 
be made on a cash disbursement basis. Accordingly the laws 
of Massachusetts and New York City provide that the state 
or city authorities shall appropriate each year the amount 
necessary for the payment of the old pensions which are due 
that year. 

Contribution towards Pensions to Present Members for 
Past Sendees. On the establishment of a pension system, 
as pointed out in a preceding chapter, the teachers already 
in the service, even those who have been in service so long as 
to make their retirement imminent, are invariably embraced 
in the benefits of the system without any previous provision 
having been made for the payment of those benefits. The 
problem which confronts the government in financing "the 
accrued liabilities" which are thus assumed — for obviously 
the teachers themselves cannot afford to make up any con- 
siderable part of the deficiency — has proved perhaps the knot- 

126 



The Government's Contribution 

tiest of all the problems involved in the establishment of 
teachers' pension systems. 

The total amount which would have to be set aside to 
liquidate at once the "accrued liabilities" of the system at its 
inception usually approximates or exceeds the amount of the 
annual payroll of the active teaching force. Since it is im- 
practicable to secure a fund of such proportions at the inaugu- 
ration of the system, provisions become necessary for the 
amortization of the initial deficiency with compound interest 
accumulations on the unpaid balances. The entire deficiency, 
with interest, may be spread over a number of years, say sixty 
or seventy, during which period all teachers who were in 
the system at the time of its establishment would have left 
the service and those who had retired would have passed 
away. If such liquidation is made in instalments of equal 
amounts, then the annual charge during the first years is a 
heavier burden on the taxpayer than during subsequent years 
when the community has grown and is better able to stand a 
heavy financial burden. In order to adjust payments to the 
financial ability of taxpayers, the amortization of the de- 
ficiency may thus be arranged on an increasing scale. The 
"deficiency" contribution may be fixed as a percentage of the 
payroll of the active force which will result in larger instal- 
ments as the personnel and salaries increase. The time 
required to liquidate the initial deficiency will also be corre- 
spondingly shortened. 

Up to a certain point the ascending scale of deficiency con- 
tributions exceeds the demands on the deficiency fund. Each 
year, as the present members retire, a portion of the accrued 
liabilities matures for payment. The payments are very small 
at first but rapidly grow from year to year. The peak of 
the load is reached perhaps only twenty-five or thirty years 
after the establishment of the system. Then the annual pay- 
ments to present members on account of accrued liabilities 
will begin to decrease, though they will cease altogether per- 

127 



Teachers' Pension Systems in the United States 

haps only some sevent}^ years hence when the last of the 
present members dies. 

Various methods for liquidating the "accrued liabilities" 
deficiency of a system have been devised in this country and 
abroad. In some systems the government contributes on a 
cash disbursement basis, in others the contribution is made 
on a partial reserve basis, and in the third a still further step 
is made in this direction as the government contributes on a 
full reserve basis. 

One of the simplest methods is that adopted abroad by 
Scotland and by Massachusetts and Connecticut in this coun- 
try. It unloads the "accrued liabilities" of the fund upon the 
taxes. The fund thus has no deficiency and starts with a 
clean slate. The state provides no special reserve for the 
discharge of the accrued liabilities, but pays them, as they 
mature, directly from the taxes. It appropriates each year an 
amount sufficient to pay the "prior service" pensions which 
are due that year. The disadvantage of this method lies in 
the fact that the load is, therefore, unequally distributed 
between the immediate and the more remote future. Further- 
more, the aggregate amount contributed by the government 
during the entire period of sixty or seventy years, during 
which the accrued liabilities would be paid, is considerably 
larger than it would have been had it been made on a reserve 
basis and had it been earning interest. 

Another method, adopted in London and considered but 
rejected in New York City, consists in paying to the fund each 
year only the interest on the deficiency. Thus, while the 
deficiency is not being discharged it is at least prevented from 
increasing. The disadvantage of this method lies in the 
perpetuation of the indebtedness of the government and the 
constant payment of interest. 

A third method is adopted in New York City. The city 
discharges the accrued liabilities on a combined "cash dis- 
bursement" and "partial reserve" basis. It appropriates each 

128 



The Government's Contribution 

year the amount necessary to pay the ''prior service" pensions 
which are due that year, and, furthermore, appropriates each 
year an additional amount with which it sets up a partial 
reserve against the future increases of payments on account 
of the "prior service" pensions. The partial reserve helps 
the government to carry the peak of the load in the proximate 
future and reduces the high appropriations on that account 
which would otherwise be necessary. A contribution towards 
a partial reserve presents, therefore, a distinct advantage. 

The fourth method originated in Liverpool and was recom- 
mended by the New York City Pension Commission in 191 6. 
It consists in discharging the deficiency by means of equal 
annual instalments over a period of sixty years. Each year 
the government pays into the fund the same amount of an 
"accrued liability" (or "deficiency") contribution. The ad- 
vantage of this method is that each year's taxes carry the 
same load, and the interest on the "accrued liability" contri- 
bution considerably reduces the cost of discharging the 
deficiency. 

Finally, a fifth method is that recently adopted in Pennsyl- 
vania. According to this method the "accrued liability con- 
tribution" is not of a fixed amount but a fixed percentage of 
the payroll. Naturally, the payroll grows as the community 
increases and, therefore, the amount of the deficiency con- 
tribution will increase at the same rate. The entire deficiency 
can thus be discharged, without much hardship, in a much 
shorter period than sixty years. 

Contribution towards Pensions to Present Members on 
Account of Future Services. The liabilities to present mem- 
bers on account of their subsequent services may present a 
no less considerable item than the accrued liabilities. Thus, 
for example, at the reorganization of the New York City 
system they amounted to about $36,000,000 as against about 
$17,000,000 of accrued liabilities. The problem of meeting 
them is also a difficult one. 

129 



Teachers' Pension Systems in the United States 

Like accrued liabilities, these liabilities mature only gradu- 
ally. Only a few ''subsequent service" pensions become pay- 
able at first, and the payments on that account are far smaller 
than those on account of "prior service" pensions. The pen- 
sions during the first year or two represent almost entirely 
"prior service" (i. e. an accrued liability) and almost no "sub- 
sequent service." With each further year the new pensioners 
have on the average one year more of subsequent service and 
one year less of prior service to their credit. The retirements 
granted fifteen or twenty years hence may represent on the 
average an equal amount of prior and subsequent services 
Thus, the payments on account of the latter follow close on the 
heels of the maturing accrued liabilities. If the peak of the 
load of accrued liabilities is reached perhaps twenty-five years 
hence, the peak of the load on account of subsequent services 
will be reached perhaps fifteen or twenty years thereafter. 

The form and to a certain extent the rate of the govern- 
ment contribution depends on the basis on which it is made. 
If it is made on a cash disbursement basis, as for example 
in Massachusetts and Connecticut, the rate of contribution 
is far below the normal cost of the benefits in the beginning 
but will be far above the normal cost some thirty or forty 
years hence, and the aggregate amount so contributed by the 
government on account of the present members during their 
lives will be far above the amount which it would have been 
called upon to contribute on a partial or full reserve basis. 
If the government contributes towards a partial reserve, as, 
for example, in New York City, besides discharging the 
maturing obligations on a cash disbursement basis, it will 
slightly increase its present light load but reduce its future 
heavy burden. 

Of the various forms of contributions made on a full reserve 
basis the following two may be noted. Under one form, the 
government contributes on account of each member and dur- 
ing his entire service a certain percentage of his salary, that 

130 



The Government's Contribution 

percentage being fixed in accordance with his age; under 
the other form, the government contributes a certain constant 
percentage of the entire payroll for a certain period of years 
until the entire liability is liquidated. The advantage of the 
first form of contribution, which was proposed in 1916 in 
the reorganization plan of the New York City fund, lies in 
the fact that an individual reserve is created for every member 
and that the government contributes on his account just as 
long as he stays in the active service. The advantage claimed 
for the other form, which was adopted by Pennsylvania, is 
that it is simple, that it bears the same ratio each year to the 
entire payroll instead of a decreasing ratio as does the other 
form of contribution, and that the exact period during which 
the liability will be liquidated depends on the growth of the 
payroll. 

If the same method of contributing is adopted for dis- 
charging liabilities towards present members for both past 
and future services, then the contributions on that account 
may be consolidated into one. Thus, for example, Massa- 
chusetts and Connecticut appropriate each year an amount 
sufficient to pay all pensions that are due that year both on 
account of prior and subsequent services; New York City 
appropriates each year one million dollars which is applied 
to the creation of a partial reserve against both accrued lia- 
bilities and subsequent services; and Pennsylvania contributes 
semi-annually 2.8 per cent of the annual payroll (i. e. about 
5.6 per cent of salary annually) with a view to building up 
a full reserve against the total liability towards its present 
members. 

On the other hand, the systems applying different methods 
to the discharge of the two kinds of liability, require of the 
government two kinds of contributions: in the Liverpool 
system, the first has been called an "accrued liability" con- 
tribution, whereas the second has been termed a "current" 
or "normal" contribution. 

131 



Teachers' Pension Systems in the United States 

The forms of "partial" and "full reserve" contributions 
here described represent the first experimental steps along 
lines of equitable distribution of the "deficiency" and "normal" 
obligations towards the "present members" of a scientifically 
constructed system. New forms of partial and full reserve 
contributions will undoubtedly be introduced in the future. 
They will further develop the fundamental principle that the 
contribution should be so devised as to liquidate the particular 
obligation in the most economical way to the state or city 
employer, and at the same time to assure the greatest solvency 
and permanency of the system. 

Contribution toivards Pension Benefits of Neiv Entrants. 
The liabiHties on account of pension benefits to new en- 
trants are of an increasing nature. This may be illustrated 
by the following simple case. At the time of establishment 
of the system there are no new entrants and the liability on 
their account will be nil. If a thousand teachers enter the 
service each year and if the "pension" liability for each new 
entrant averages $i,ooo, the total "pension" liability on their 
account will amount to $1,000,000 at the end of the first year, 
$2,000,000 at the end of the second year, $3,000,000 on the 
third year, and it thus will grow from year to year. Perhaps 
none of the new entrants will be placed on the "pension" roll 
for the first ten or fifteen years and the first payments will 
be very small. However, once the payments begin they will 
grow at an accelerating rate. Provision should, therefore, 
be made in advance against the future increases in the lia- 
bilities and the annual "pension" payments to new entrants. 
The contribution supporting their future "pension" benefits 
should be made on a reserve basis : each year from the time 
of appointment of the new entrant the government must set 
aside such a percentage of salary as will be sufficient, together 
with interest, to accumulate a reserve which will provide the 
"pension" benefits. It is the most economical contribution 
for the employer, for it involves a comparatively small imme- 

132 



The Government's Contribution 

diate expense, because the new entrants are not numerous 
in the beginning, they have no prior services and do not 
present a deficiency as do the other members, and they are 
young and require, therefore, only a very low rate of con- 
tributions. It is the most desirable form of contribution from 
the point of view of the new entrants, because a "reserve" 
is being set up by the government which serves as a guarantee 
that their remote benefits will be paid. Thus, more than 
any other contribution it assures the permanency of the system. 

The states of Massachusetts and Connecticut make no ad- 
vance provision whatsoever for new entrants except to pay 
their "pension" benefits as they mature. The time when the 
first contribution on account of new entrants will be made 
is practically postponed twenty years. It will then begin on 
a cash disbursement basis with the result that the annual 
payments on that account will thereafter rapidly increase from 
year to year and the permanent operation of the system may 
be endangered. 

The city of New York and the state of Pennsylvania con- 
tribute on a reserve basis with respect to new entrants. The 
contribution is fixed at such a percentage of salary as is 
sufficient to provide "pension" benefits to all those who accord- 
ing to actuarial estimates will remain in the service until 
retirement. The number of those who will withdraw from 
the service before retirement, through resignation, dismissal 
or death, is discounted in advance, and no contributions are 
made on their account. This arrangement considerably re- 
duces the rate of contribution and results in an immediate 
economy for the government. 

Contribution totvards Administrative Expense. The ad- 
ministrative expense of any system is in the nature of a 
current expenditure and should, therefore, be made on a 
cash disbursement basis. As it may vary considerably from 
year to year, the scientific systems here discussed have pro- 
vided that each year the legislature shall appropriate the 

^33 



Teachers' Pension Systems in the United States 

amount which has been estimated as necessary for meeting 
the probable expenditures of the ensuing year. 

Contribution towards the Maintenance of the Guaran- 
teed Rate of Interest and Solvency of the System. The 
framers of a system may find it desirable that the government 
should guarantee a certain rate of interest so as to assure 
the system against a sudden fall in the interest rate realized 
on its investments, or that it should guarantee to cover any 
other deficiency which may develop. The systems of Massa- 
chusetts and Connecticut do not guarantee any rate of interest 
on the contributions of the members of the system. They 
credit such interest to the individual accounts as has been 
actually earned on the investments during the year. The rate 
of interest realized during the year may be very low, and yet 
the state will not need to contribute on that account. Quite 
different is the situation in the system of New York City. 
The law guarantees 4 per cent of interest on the teachers' 
contributions. If the interest actually earned falls below this 
rate, the city must cover the deficiency. The soundest method 
probably is to cover the deficiency during the year it occurs. 
The city can thus contribute on that account on a cash dis- 
bursement basis. 

In case the government guarantees the solvency of the 
system, it may be called upon to contribute on account of 
any deficiency which may appear. Thus, for example, under 
the system of New York City, the city guarantees that "in no 
case shall such annuity be less for each one hundred dollars 
of accumulated deductions of a present-teacher at the time 
of retirement than is shown in the following schedule." If 
the actual rate of mortality among the teachers should be 
lower than the one assumed, then a deficiency will appear 
which the city will have to cover. It may be necessary to 
devise a special contribution which will discharge the de- 
ficiency on a reserve basis during a period of years. The 
problem will be to devise such a form of a "deficiency" con- 

134 



The Government's Contribution 

tribiition as will be most economical under the particular 
conditions. 

Coordinating the Various Elements of the Contribution. 
The form and rate of each element of the government con- 
tribution must be so devised as not only to be most appropriate 
for meeting the particular liability, but also to harmonize 
with the other elements of its contribution. The problem is 
one of coordinating all the component parts in such a way as 
to make the whole contribution most economical for the gov- 
ernment with regard to both its present and future burdens, 
and also most effective in so far as the solvency of the system 
is concerned. An illustration of this is afforded by the cases 
of the new systems of New York City and Pennsylvania. 
The former was launched with the load of an already existing 
pension roll which required on its part an immediate annual 
contribution of a million dollars. Under such abnormal con- 
ditions the city could not afford to contribute on a full reserve 
basis on account of the present active members, and the 
"partial reserve" was probably more economic. While the 
annual appropriations for the payment of new pensions will 
increase, the annual appropriations on account of the old 
pensions will decrease. The Pennsylvania system started 
under quite different conditions, for it did not find an already 
existing pension roll which it had to carry. In view of the 
absence of this element of contribution it could well afford 
to contribute on a full reserve basis on account of its present 
members. 

Despite the need for precise actuarial computation and for 
careful fiscal examination which the foregoing discussion 
shows to be indispensable if the amount of the government's 
contribution is to be fixed upon a sound basis, cities and states 
have resorted to a variety of unscientific and unsound methods. 
The chief of these are deserving of detailed consideration. 

Unsound Methods of Financing the Government's Con- 
tribution: The Cash Disbursement Method. From the 

135 



Teachers' Pension Systems in the United States 

nature of the case, as well as from a review of the considera- 
tions developed in the preceding section with regard to the 
varying rates at which the several types of liability to be met 
by the government mature, it would seem too plain to need 
argument that the only fair and sound method of financing 
the major elements in the government's contribution is to set 
up a reserve to which contributions may be made before the 
liabilities have begun to mature in quantity. Despite the 
obvious wisdom of this principle, in not a few systems the 
government still attempts to provide its contribution by the 
cash disbursement of the sums currently required. This 
method is found in the state system of New Jersey and 
in a number of other non-contributory systems.^ Their statutes 
provide that the government must appropriate each year an 
amount sufficient to pay the pensions of that year. 

Systems of the "cash disbursement'' type are almost invari- 
ably unsound for the reason that at their establishment the 
future growth of the pension claims is either greatly underesti- 
mated or not anticipated at all. The requirements of the system 
are very small at the beginning, but the government contribu- 
tion rapidly increases until it considerably exceeds the normal 
cost of the system. The generation of taxpayers, which is re- 
sponsible for the establishment of the system, escapes with a 
comparatively light contribution, whereas future generations 
have to bear the great bulk of the cost and contribute at much 
higher rate than they would have contributed on a reserve 
basis and under a different form of contribution. Each suc- 
ceeding generation undergoes a relatively heavier and entirely 
unexpected strain. 

As soon as such strain exceeds the limits of financial sacri- 
fice which the public is willing to bear, relief is sought by 
levying assessments on the teachers, or, where they are already 
exacted, by increasing the rate of contribution, by reductions 
in the scale of benefits, by changes in retirement conditions, 

^The non-contributory system of New Jersey ceased to operate in 
April, 1919. 



The Government's Contribution 

or by other restrictions. Where the pensioning authorities 
hesitate to change the original scheme of benefits or where 
legal responsibility for pension payments prevents such course, 
compensatory economies are effected in salary expenditures 
either by lowering existing wages or checking normal salary 
increases, under the plea of the costliness of pension pro- 
visions. 

Cash Disbursement to Cover Annual Deficiencies of an 
Unsound Fund. Closely related to the "cash disbursement" 
method proper, which is applied where no special fund exists, 
is the method employed where a fund does exist to supplement 
deficiencies in its income by a cash disbursement. In several 
of the unscientific systems the framers, realizing that the 
revenues with which the system is provided under the statute 
may prove insufficient to support the promised benefits, have 
incorporated in the law a provision that in case in any one 
year a deficiency arises the state or the city shall appropriate 
an amount sufficient to cover it. The idea usually is that the 
deficiencies will be only accidental and temporary. The actual 
experience, however, is that once a deficiency a.ppears, it stays, 
and furthermore increases from year to year under the pres- 
sure of increasing disbursements. As a result, larger and 
larger appropriations are required each year to cover the 
rapidly increasing disbursements and the system becomes 
exceedingly burdensome. 

Unsound Methods cf Financing the Government's Con- 
tribution: Using Special Revenues not Determined by 
Pension Needs. In reviewing the evolution of teachers' pen- 
sion systems in this country it was seen how the early wholly 
contributory systems, in their attempts to secure government 
aid, shrewdly suggested the diversion to their funds of obscure 
special revenues — such as excise taxes or the interest on the 
school funds — thus avoiding the opposition which would have 
been aroused had a direct appropriation from the general 
revenues been sought. The device thus resorted to as a meas- 

U7 



Teachers' Pension Systems in the United States 

ure of strategy was not long in hardening into a precedent; 
and in several of the existing systems the government's con- 
tribution still consists of special revenues which cannot, in 
the nature of things, bear any accurate relation to the needs 
of the system. So, in California, 5 per cent of the inheri- 
tance tax is thus allotted; in New York, previous to the re- 
organization of its S3^stem, an equal percentage of its excise 
tax was thus pledged. Of a similar character was the pro- 
vision under the old system of New York City and of Cleve- 
land that made available the sums obtained by deductions from 
teachers' salaries on account of unexcused absences. 

The objection to these methods of financing the govern- 
ment's contribution, on the score solely of their unreliability 
and their lack of correspondence to the needs of the system, 
is too obvious to require discussion. The fluctuating character 
of incomes derived from such sources is illustrated by the 
experience of the old New York City fund with its excise tax 
contribution, which slowly decreased during the first four 
years, when it suddenly took an upward trend which it fol- 
lowed during the next seven years until, after a steep increase 
in 1908 and an almost as steep a decrease in 1909, it took a 
downward trend which it followed to 191 7, when, under the 
new law, it was altogether eliminated from the fund. Re- 
ferring to the California method of financing the state's con- 
tribution by setting aside a percentage of the inheritance taxes 
received, the retirement fund committee said in 1916: 

The inheritance tax is a fluctuating amount, depending upon 
the number of estates liable to the tax probated during any one 
fiscal year. It has been an unusually prolific source of revenue 
during the past two fiscal years, but may suffer a decline at 
any time. It is as uncertain as life. The last congress placed 
a federal tax on inheritances, w^hich may seriously afTect state 
income from this source. The combination of state and 
federal tax may place such an onerous burden upon inheri- 
tances that public opinion will demand a reduction, in which 
case the state will be obliged to make the sacrifices, as it alone 
is responsive to the wishes of the people of California. 

138 



The Government's Contribution 

Should this situation arise, the percentage now received by the 
retirement salary fund from the inheritance tax must be 
increased, or a regular income provided from another source. 
The retirement salary fund cannot suffer the slightest reduc- 
tion in revenues, but should, on the contrary, be considerably 
augmented if we desire to place the future administration 
of the law upon a secure financial foundation/ 

The history of pension funds supported by special revenue 
indicates that their financial unsoundness is slow to be borne 
in on the public mind. The special revenue grows at a slower 
rate than the requirements of a pension fund and with each 
year the appropriation becomes, therefore, less and less ade- 
quate. But since the money becomes available automatically, 
the bad condition of the pension fund may continue until the 
fund collapses. Only then will the government be called upon 
to revise its pension provisions. 

Such was the experience of the New York City pension 
funds, as shown by the following extracts from the reports of 
the pension commission :' 

The constant extension and liberalization of the city's pen- 
sion policy in the past is directly due to the comparative ease 
with which its pension funds secured cash through indirect 
methods, apparently imposing no burden either on the tax- 
payer or on the beneficiary. It is obvious that the city would 
have revised its pension provisions long ago if the amounts 
it indirectly contributed had appeared in the annual budgets 
as direct appropriations clearly labeled 'for pensions.' 

In connection with the criticisms of the present method of 
providing funds to meet the cost of pensions, it is desired to 
call special attention to its worst feature — the use of miscel- 
laneous city revenues as sources of income. In the first place, 
it is unfair to the taxpayer, since it throws a cloak of mystery- 
over the real cost of pensions. The money becoming avail- 
able each year from these indirect sources automatically re- 
verts to the fund and is used up without the public realizing 

'School Report, 1916, p. 74. 

*Report on the Pension Funds of the City of New York, 1916, Part 
I, p. 54. Report on the Teachers' Retirement Fund, 1915, p. 28. 



Teachers' Pension Systems in the United States 

the true proportions of the expenditure. Secondly, there is 
no parallel between the growth of miscellaneous revenues 
applicable to the fund and pension payments, since increases 
in revenues seldom, if ever, grow at the rate of pension lia- 
bilities. 

It is, therefore, in the interest of both the taxpayer and the 
present and prospective beneficiaries of the fund that it should 
not derive its income from miscellaneous revenues, a method 
which creates the erroneous impression of shifting the pension 
burden from both the taxpa3^ers and the beneficiaries. The 
city's part of the pension fund cost should be met systemati- 
cally and' openly by budgetary appropriations. 

The only sound method of raising the government con- 
tribution is to raise it from the general fund. Such an appro- 
priation must appear in the annual budget. It is not disguised, 
therefore, as is the one which is derived from special funds, 
and it can be coordinated with the financial plan of the gov- 
ernment in relation to its other expenditures. 

Unsound Methods of Financing the Government's Con- 
tribution: Fixing Rates not Related to Pension Needs. 

Very similar in some of its effects to the use of special 
revenues for financing the government's contribution is the 
provision, found in a number of systems, whereby the govern- 
ment's annual contribution to the pension fund, though drawn 
from the general revenues, is determined as to amount by 
provisions having no accurate relation to the needs of the 
system. Thus, the government's contribution is sometimes 
fixed at a certain percentage of the assessed valuation of all 
taxable property. Four of the nineteen contributory systems 
selected for special study make this provision.^ 

In Cleveland the city's contribution is fixed at from i to 2 
per cent of the total school taxes. The advantage of govern- 
ment aid thus determined is that it tends steadily to increase 
in amount. Unfortunately, however, it increases slowly, for 

^The rates are as follows: Illinois, o.i mill; Minnesota, 0.5 mill; Bos- 
ton Permanent Fund, 0.7 mill; Denver (maximum), o.i mill. 

140 



The Government's Contribution 

it depends upon the comparative increase of the population 
and taxable property, whereas the requirements of the fund 
always increase more rapidly, as they depend upon the rapidly 
increasing number of pensioners on the retired list and the 
number and payroll of the members. In the Boston Per- 
manent Fund the contribution from the mill tax increased 
from $64,000 to $72,000 during the first five years, whereas 
the payroll of the members of the fund increased from 
$2,700,000 to $3,500,000. The ratio between the contribu- 
tions and the payroll which was 2.3 per cent in 1908 was 
only 2 per cent in 1913. The contribution in 1915 was 
exceeded by the disbursements and had to be increased by a 
new law from five cents to seven cents on each thousand dol- 
lars of assessed valuation. 

In a few jurisdictions the rate of the government's contri- 
bution is determined by factors more nearly related to the 
probable growth of pension requirements. In Wisconsin the 
state's contribution is fixed at the rate of ten cents per each 
person of school age. A government contribution of a cer- 
tain percentage of the payroll obtains in the systems of the 
state of New York and the city of Chicago. It increases at 
the same rate as the membership and the payroll increases, and 
it can easily be fixed at the same percentage at which the 
employee's contribution is fixed. 

As the pension requirements increase more rapidly than the 
payroll or the school population, these methods of determin- 
ing the government's contribution, while much more satis- 
factory than those dependent upon conditions not directly 
related to the schools, are open to the general objection that 
they do not insure to the pension fund an amount correspond- 
ing to its scientifically determined needs. 

Most unscientific of all is the provision found in some 
systems for the contribution by the government of a uniform 
amount each year. 

Out of the twenty-four systems which have been studied 

141 



Teachers' Pension Systems in the United States 

in detail, only two systems — those of Maine and Virginia — 
have this provision. The state contribution in Maine is fixed 
by statute at $25,000, and that in Virginia at $5,000 annually. 
In view of the fact that the pension expenditure is of a con- 
stantly increasing nature, it is evident that it cannot be 
financed long with a contribution of a fixed amount. In time 
the expenditures of the fund will outgrow its fixed revenue. 

Unsound Methods of Financing the Government's Con- 
tribution: Amount of Contribution Discretionary, In a 

few systems the amount to be contributed by the government 
is not fixed according to any definite rule, the appropriate 
fiscal authorities being empowered to fix whatever amount 
they deem proper. The systems of Baltimore, Pittsburgh, 
Buffalo and Philadelphia illustrate this type of government. 
A system which has to depend for its support upon the change- 
able views of the government administrators, and which may 
be curtailed at any moment, cannot develop normally. The 
example of Pittsburgh is illustrative. After four years of 
operation, during which the requirements of the fund in- 
creased from $7,000 to about $50,000, the board of education, 
impressed by the increased contribution it was required to 
provide, decided to discontinue granting new retirements, 
gradually to abandon the old system, and to establish a new 
system instead. In Philadelphia the city may, under the 
statute, contribute any amount not below $50,000 nor above 
the amount of the teachers' contributions of the preceding 
year. During the first six years it contributed only $50,000 
annually. Each following year smce 19 13 it arbitrarily in- 
creased its contribution by $10,000. In Buffalo the statute 
provided that the common council might in its discretion 
contribute any amount not more than the amount which the 
teachers contributed the year before. The council decided 
upon an appropriation of only $10,000. It is still contribut- 
ing this small amount, less than one-fourth of the amount 
which the teachers contribute, at the present time. 
142 



CHAPTER IX 
THE TEACHER'S CONTRIBUTION 

The determination of the contributions to be paid by the 
teachers presents two distinct problems: How shall the cost 
of the benefits be assessed against the different classes of 
teachers? How shall the amount assessed against the indi- 
vidual teacher be distributed over the entire period of con- 
tribution.? 

The desirability of making some distinction in the assess- 
ment of contributions between the various classes of teachers 
follows plainly from the varying relations which they sustain 
to the probable benefits of the system. Most clearly is this 
apparent in connection with retirement benefits. In those 
systems, forming a considerable proportion of the whole, 
which make a minimum length of service the only requisite 
for retirement, the age at which a teacher enters the service 
will obviously bear an essential relation to his or her pros- 
pective retirement benefit; a teacher entering the service at 
the age of 20, for example, in a system where 30 years' service 
is required for retirement, may reasonably look forward to 
from fifteen to twenty years of life after retirement; while one 
entering at the age of 30 may expect to live after retirement no 
more than about two-thirds of that period. Again, in those 
relatively few systems which permit retirement, regardless of 
length of service, at a fixed age, it is plain that the later in life 
the teacher enters the service the shorter the period he or she 
has in which to contribute towards the retirement benefit. 

Sex, too, has an important bearing on the probability of 
benefits. The mortality of women is lower than that of the 

143 



Teachers' Pension Systems in the United States 

men. The cost of a given annuity payable at a given age is, 
therefore, higher in the case of the women than in the case 
of the men, and it would be unfair to charge them for it at 
the same rate. Where retirement is contingent upon length 
of service and women may retire at an earlier age than men, 
the need for different rates is still more manifest. 

Lastly, in those systems in which the amount of the annual 
retirement benefit is dependent upon the salary earned by the 
teacher at the time of retirement or for a period previous there- 
to, the amount of the benefit received by the individual, other 
things being equal, will vary according as the rapidity of the 
advancement of the individual in the service has been above 
or below the average. 

In any scientific pension system the three factors mentioned 
— age (both at entrance and retirement), sex and salary — 
should be given weight in determining the rates of contribu- 
tion. It is impossible of course to foretell which of the mem- 
bers of a fund will be superannuated or disabled, which will 
resign or be dismissed or die before qualifying for the benefit, 
or to tell how long this or that member will live after retire- 
ment, and how much in aggregate annuities he will draw from 
the fund, and to make him contribute accordingly. But it is 
possible to determine through statistical observations and 
actuarial computations how many members will receive one 
or the other kind of benefit, how long on the average those 
who retire at a certain age will live after retirement, and how 
much on the average they will draw from the fund during 
that time, and what will be the average cost of various benefits 
at various ages for different sexes and salary groups. 

In some of the unscientific systems the rates of contribu- 
tion have been fixed in an arbitrary manner and the factors 
mentioned have been either entirely ignored, or only one of 
them — the salary factor — has been considered. In a number 
of these systems the length of service factor has been taken 
144 



The Teacher's Contribution 



into account and an arbitrary difference in the rates based 
on the length of service has been adopted. 

Contribution not on a Cost Basis : Uniform for all Mem- 
bers, Irrespective of Age, Salary, Sex and Service. A 

number of systems are still found in which a uniform con- 
tribution is required of all members, regardless of the differ- 
ence in age, salary, sex and length of service of the members. 
Among the twenty-four systems, here discussed three are of 
this type. The facts regarding them are as follows : 

Systems Having Amount of Contribution Uniform Throughout 





Contributions 


Benefits 


Conditions of 
Retirement 


Systems 


Age 


Length of 
Service 
(Years) 


California 


$1 monthly 


$500 


None 


30 


Boston Permanent 

Fund 
Cleveland 


$18 yearly 
$20 yearly 


$120 

$12.50 for 
each year 
of service, 
maximum, 

$450 


" 


30 
30 



Such systems are fortunately few. Most systems recognize 
one or more of the variables discussed in fixing the rates of 
contribution. 

Contribution not on a Cost Basis: Graduated According 
to Salary. The graduation of contributions according to 
salary is the form of graduation most commonly found in the 
teachers' pension systems of to-day. 

The table on the following page shows the systems falling in 
this group. 

It will be noticed that the New Jersey system graduates 
the contributions according to salary and length of service 
rendered previous to becoming a member. By this method it 

145 



Teachers' Pension Systems in the United States 
Systems Having Rate of Contributions Graduated According to Salary 









Conditions of 




Contributions 


Benefits 


Retirement 


Systems 














Length of 








Age 


Service 
(Years) 


New Jersey 


2 per cent of sal- 


60 per cent 


None 


20 (disa- 




ary for members 


of salary, 




bility) 




with 10 years' 


minimum 








prior service; 2 J^ 


$250; max- 








per cent with 15 


imum $650 








years, and 3 per 










cent if longer 










prior service 








New York 


1 per cent of salary 


Yi salary. 


60 and 25 






maximum, 


or 






$600 


None and 35 


Virginia 


1 per cent of salary 


Yi salary, 
maximum, 
$500 


58 (men) 
50 (women) 


30 



presents an attempt in an indirect way and in a crude form 
to graduate contributions according to entrance age/ 

Contribution not on a Cost Basis: Graduated According 
to Length of Service. In a few systems the contribution has 
been made to depend entirely upon the length of service, the 
period of service being divided into five or ten year periods 
and a fixed amount of contribution set for each period, regard- 
less of the salary or age of the member. The table on the 
following page sets forth certain facts regarding the systems 
in this class. 

The crudity of this method of graduating contributions, 
and its failure to correspond in any way to the variations of 
age, and in any but the roughest way to variations of 
salary, are obvious. Its sole merit, surely a slight one, is that 
of simpHcity. 

Contribution not on a Cost Basis: Graduated According 
to Salary and Length of Service. In a few systems the 

'This system as already stated is no longer in operation. 
146 



The Teacher's Contributioi 



e oj 









jXl^ "S UOJ Xo 



e^ 8 



^ e 



CO wee- <u 



147 



Teachers' Pension Systems in the United States 

contribution is fixed as a percentage of salary which increases 
with length of service, as shown in the table on the following 
page. 

It will be observed that in four of these five systems the 
increase of contribution with increasing salary is mitigated, 
at least for the teachers who advance most rapidly, by the 
provisions setting a maximum to the contribution required in 
each period of service. As respects these teachers the systems 
in question bear a resemblance to those in which a fixed 
amount of contribution is required during each period of 
service. The low rate of contribution during the beginning 
of a teacher's career facilitates the difficult task of the leaders 
of a fund of soliciting the membership of the younger teachers. 
As the teacher approaches the time of retirement he becomes 
more willing to pay the higher rate. This apparently is one 
of the reasons why this arrangement has been adopted. 

Contribution of a Uniform Percentage of Salary for all 
Members, with Benefits Adjusted on a Cost Basis. A plan 
which does not take account of the age of the entrant in fixing 
the rate of contribution, but which instead takes it into account 
in fixing the benefit, is found in the systems of Massachusetts 
and Connecticut. Every member contributes annually 5 per 
cent of his salary regardless of the age at which he entered 
the service, but the longer the period during which the con- 
tribution is made, the greater is the sum which accumulates 
with interest and the greater the benefit which it can purchase. 

The weakness of this plan appears in case of the late entrant. 
His contribution provides an inadequate annuity for super- 
annuation and disability and also inadequate savings benefits 
in case of resignation, dismissal or death. For example, a 
man who enters the service at age 25 and contributes for 
thirty-five years 5 per cent from a salary which amounts to 
$700 the first five years, $1,000 the next twenty years and 
148 



The Teacher's Contribution 



ScJ^ 



Q H 

3^ 






O ra oj fa 



o S 






^s^h; 



=81 



CO ^ 









(M S 



^ oa a 



ca 

O CO 

^a 



goo 



CM 



CM a 






w go 



^ c 

O) c 






U go 



oaa 



u 30 

C< >3CM 



S 5 

W gLO 

D.ca 



o go 
aw 



Slo 

" a • 



O gin 

era 

^a 



1- =^ 



o. c^ee- 



149 



Teachers' Pension Systems in the United States 

$1,500 the last ten years, will have to his credit $2,416^ 
which will purchase an annuity of about $225 at the age of 
60. On the other hand, a man who enters the service at age 
50 and contributes 5 per cent from a $1,000 salary for ten 
years will have to his credit only $579.64, which will purchase 
an annuity of only about $55.^ 

Rate of Contribution Graduated According to Age and 
Salary: Benefits on a Cost Basis. The new systems of New 
York City and Pennsylvania graduate the contributions 
according to age at entrance into the service and according to 
salary. In the case of an early entrant a small contribution 
paid during a long period accumulates an amount sufficient to 
purchase at a certain age an "annuity" which, together with 
the "pension" offered by the city, will provide a total of about 
one-half pay. In the case of later entrants a large contribu- 
tion, although made through a shorter period, makes it pos- 
sible to purchase an annuity of about the same amount, and 
also to provide an adequate savings benefit in case of resigna- 
tion, dismissal or death. This method is, therefore, much 
more elastic than that of the Massachusetts system. 

If the benefits were rigidly fixed at one-half salary, then 
in computing the percentage of salary required to cover the 
cost of that benefit, it would have been necessary to assume 
a certain average rate of salary advancement. A member 
who advances more rapidly than the average, however, may 
eventually receive more than he has been paying for ; whereas 
a member who advances more slowly may receive less than 
what he has been paying for. The result will, to a certain 
extent, be inequitable. 

The framers of the New York City and Pennsylvania sys- 

t 5 contributions at $35 $187.91 

20 " "50 1,358.63 

ID " "75 869.46 

Total 35 $2,416.00 

"Table 4 of Appendix 4 shows the annuities which can be purchased by 
certain sums at various ages. 



The Teacher's Contribution 

terns have sought to obviate this difficulty by the following 
method. They determine the percentages of salary which, if 
contributed on the basis of average salary advancement, will 
purchase at a certain age or after a certain length of service 
an "annuity" of a certain fraction of salary, it being assumed 
that the other fraction is contributed by the government; but 
they do not guarantee that in every case the annuity will amount 
exactly to that fraction of salary. Each member receives such 
an annuity as his contributions will purchase. In case of 
those who advance more rapidly than the average, the amount 
will be somewhat less than that fraction of salary, whereas in 
the case of those who advance more slowly the annuity will 
amount to more than that fraction. Thus, the members who 
advance more slowly do not pay for the annuities of those 
who advance more rapidly. 

Distributing the Contribution over the Period of Serv- 
ice. In some actuarial systems it has been proposed that the 
rate of contribution be made lower at the beginning of the 
service than at a later period, and that it be made to gradually 
increase as the service advances. The main advantage claimed 
for this method is that it lightens the burdens of the members 
at the time when they are young and least interested in retire- 
ment provisions, and increases the burden as they become 
older and more concerned in retirement. 

The outstanding objection to this method is that it impedes 
the operation of the interest factor, for it reduces to the lowest 
rate the first contributions which earn most interest during 
the long period they remain on deposit, and increases to the 
highest rate the last contributions which earn the least inter- 
est. In view of the loss in interest this form of contribution 
is in the aggregate much more burdensome to the employee 
than is a contribution of a uniform percentage of salary 
throughout the entire service. None of the systems which 
have been established on an actuarial basis either in this 
country or abroad have adopted this method. All have adop- 

151 



Teachers' Pension Systems in the United States 

ted the uniform percentage throughout the entire service as 
the most economic form of contribution. 

Minimum Contribution as a Prerequisite to Full Benefit. 
To protect their fund against being drained by the payment 
of pensions in respect to prior services during which no con- 
tributions were made, some of the unscientific systems require 
that a teacher who applies for retirement must have con- 
tributed an amount equal to at least one-half of one year's, or 
in some systems a year's, pension, otherwise his pension will 
be proportionately reduced. The table on the following page 
gives the requirements in this respect of the systems surveyed 
in this volume. 

In view of what has been said in previous chapters of the 
large size which "accrued liabilities" invariably assume in a 
system, it must be apparent that provisions of this type are of 
themselves so utterly inadequate to protect the fund and the 
contributions of the new entrants and of the younger "present 
teachers" as to be virtually useless. 



152 



The Teacher's Contribution 



Total Amount of Contributions Which a Teacher Must Pay to the 
Fund before Receiving Full Retirement Benefit 





Is Credit 












Allowed for 












Service 


Total 




Minimum 


Minimum 


Retirement 


Rendered 


Minimum 


Amount of 


Length 
of 


Retire- 


Systems 


after the 


Contribution 


Pension 


ment 




Establish- 


Required 




Service 


Age 




ment of 












the System? 










1. Systems in which 












total contributions 












must equal at least 












half of one year's 












pension : 

New York 


Yes 


Yi of one 
year's 


Max. $600 


25 and 60 
35 and None 


Minnesota 




pension 
Arrears 


$350 to 
$500 


20 


None 


California 


" 


$360 


$500 


30 


" 


Virginia 




y% salary 


Vi salary 

maximum 

$400 or 

$500 


30 


58 men 
50women 


2. Systems in which 












total contributions 












must equal at least 












one year's pension: 












Illinois 


Yes 


One year's 
pension 


$400 


25 


50 


New Jersey Re- 




$250 to 


20 


None 


tirement Fund 






$650 






Wisconsin 


' * 


" 


$312.75 to 
$450 


25 


" 


Michigan 




" 


$300 to 
$500 


25 


" 


Philadelphia. . . . 




1 


$400 to 
$1,000 


30 


60 


3. Systems in which 












the minimum of 












total contributions 












is higher than one 












year's pension: 












Chicago 


Yes 


$450 


$400 


25 


None 


Cleveland 


" 


$600 


$375 


30 


" 


Boston Retire- 












ment Fund.. . 




$540 


$132 


30 





^The law provides for the payment of arrears, which are fixed as follows : 
Ten contributions of 1 per cent and twenty of 2 per cent, or a total of 50 
per cent. 



153 



CHAPTER X 

COMPULSORY PARTICIPATION AND THE RIGHT 
TO MANAGEMENT 

A number of pension systems have been established in the 
United States in which participation upon the part of the 
teachers has been optional, but these proved so weak and 
ineffective that most of them have had to change to a com- 
pulsory basis. Not one of the twenty-four systems selected 
for detailed examination in this volume is of the optional 
type. 

Usually, when a voluntary fund is established, very few 
teachers join it at the outset. These are for the most part the 
oldest teachers who are most interested in retirement benefits. 
The younger teachers remain outside knowing that they can 
join it whenever they choose, and postpone joining from year 
to year until they, too, have grown nearer to old age. The 
financing of a fund in which old teachers are predominant is 
much more difficult of course than the financing of a system 
to which the entire force belongs. The managers are thus 
forced to conduct a continuous campaign to attract new mem- 
bers. Frequently, too, the small number of new m.embers is 
offset by the loss of other members. Withdrawal, when 
allowed under a voluntary system, frequently has a disorganiz- 
ing effect upon the fund and makes a stable financial policy 
impossible. 

Leaving financial considerations aside, important social and 
economic considerations are involved in the question of com- 
pulsion. The advocates of optional features strongly object 
to the introduction of compulsion on the ground that it 

154 



Compulsory Participation 

amounts to a confiscation of salary and is an infringement of 
the rights of the individual/ The advocates of compulsion, 
on the other hand, object to optional membership on the 
ground that it fails to insure protection to the individual 
against the main contingencies of life, to relieve the service 
of the very teachers who constitute the main object of a 
retirement system, and to protect the society against the indi- 
vidual becoming a public charge. 

The Federation of Teachers' Associations of New York 
City expressed this view in the following words :' 

Because of narrow optimism and unwillingness to look 
ahead, this type of teacher (the younger teacher) remains out- 
side of the system and arrives at the stage of superannuation 
and disability without adequate resources of her own to fall 
back on, but with strong determination to resist retirement 
unless it is accompanied with financial support at public ex- 
pense. The city, representing society, has a right to protect 
itself against unjust and unwarranted claims upon its treasury 
arising from the failure of individual teachers to include thrift 
among their virtues. 

It has a right to expect of them as an intelligent and edu- 
cated class of teachers, an appreciation of the wisdom and 
equity of compulsion in a sound measure which ofYers them 
unprecedented financial advantages, and under which they 
can, under no conceivable circumstances, suffer financial loss. 

The principle of compulsion can be enforced by two 
methods, depending on whether compulsion is enforced on 
the teachers already in the service at the time of enactment of 
the law, or only upon those appointed thereafter. 

Compulsion for New Appointees; Option for Teachers 
Already in the Service. Under one method compulsion is 
enforced only on future appointees. On the day of their 
appointment they automatically become members of the fund. 
It is urged that in their case a full measure of compulsion 

'See pp. 223 and 258. 

*Why Compulsory Participation of Teachers in Pension Fund is Un- 
avoidable. 1916. 

155 



Teachers' Pension Systems in the United States 

may equitably be enforced because they are informed before 
they accept their appointments that this will be demanded of 
them. On the other hand, the members of the existing force 
are given the option to decide, within a given time after the 
enactment of the law, whether or not they desire to join. 
Once they have made their decision, however, it may not be 
changed. If they enter they must remain in the system so 
long as they are in service. 

The objections to this arrangement are of course not so 
strong as they are to the purely voluntary system, for it may 
be expected that ultimately all the teachers who have elected 
not to enter the scheme will die or leave the service and be 
replaced by newly appointed teachers all of whom will, under 
the law, necessarily become members of the system. This 
process, however, may, for its completion, take as many as 
fifty years, and long before that period has elapsed the fund 
will have fallen into an intolerable condition. There is, in 
fact, hardly a system of this sort in operation which has not 
found it necessary to obtain legislation offering new oppor- 
tunities and new inducements to enter to those who have 
not availed themselves of the option offered them by the 
original law. But in spite of these inducements satisfactory 
responses have not been obtained. 

In Wisconsin out of 9,168 teachers only 2,168, or less than 
one-fourth, made application to come under the law before 
September i, 1912. In Ilhnois only about 1,500 of the total 
number of 22,500 teachers in the state elected to join the 
system. In Massachusetts the slow returns necessitated an 
extension of the time limit. The experience of Chicago was 
similar.^ 

Compulsion for Present Teachers. The application of 
compulsion to teachers already in the service at the time of 
enactment of the law, as well as to those appointed there- 

*A novel arrangement by which all present teachers, who do not apply 
for exemption, are made members of the system, was adopted in Ohio 
and is discussed in Chapter XVIII. 



Compulsory Participation 

after, was originally adopted in several systems. It soon met 
with considerable opposition on the part of the younger 
teachers in Chicago for the reasons already described. The 
New York City system succeeded, however, in maintaining 
it in its old system, and, furthermore, in incorporating it in 
its new scientific system which was recently enacted. This 
method greatly simplifies the matter of financing the fund and 
makes the system more effective as an administrative, economic 
and social measure. There is no doubt but that with the 
growing appreciation of the benefits derived from a combined 
pension, savings and insurance system and with the spread 
of the social insurance movement the teachers will look more 
favorably upon the compulsory feature and will readily 
accept it. 

More recently the view has taken hold that while the pay- 
ment of certain minimum rates of contributions and the dis- 
charge of certain minimum obligations should be compulsory, 
contributions above the minimum rates and the discharge of 
higher obligations should be left optional with the member. 
This combination of compulsory and optional features is 
highly desirable for it gives recognition to the mutual rights 
and responsibilities of the employees and the government. 
It has been adopted in the new systems of both New York 
City and Pennsylvania. 

The Selection of the Managers of the System. The 
management of a pension fund may be vested either in an 
already existing authority or in a body specially appointed for 
that purpose. The first method is adopted in a number of 
systems. Thus, in California and Pittsburgh the management 
is vested in the board of education; in Denver in the board 
of school directors; in Virginia in the department of pubHc 
instruction; in Maine in the superintendent of schools; and 
in New Jersey^ in the state commissioner of education. The 
disadvantage of this method is that the authorities cannot give 
the pension fund the undivided attention which it requires. 

'System now discontinued. 



Teachers' Pension Systems in the United States 

In most of the systems a special retirement board is pro- 
vided upon which both the educational authorities and the 
members of the fund are represented. In some systems the 
representatives of the authorities have the majority in the 
board; in other systems the representatives of the members 
of the fund have a dominating voice; and in a few systems 
both sides are equally represented. 

Several objections have been raised against retirement 
boards in which the government representatives are in the 
majority. It is urged that such a board is inclined to act in 
the interests of the government rather than in those of the 
members of the fund. The board frequently fails, therefore, 
to secure the teachers' cooperation, and if the fund develops 
a deficiency the blame is placed upon the government. Seven 
of the twenty-four systems studied in detail have retirement 
boards of this nature. 

On the other hand, retirement boards in which the majority 
of trustees are elected by the members of the fund have been 
objected to on the ground that these boards are inclined to be 
too liberal to the beneficiaries of the fund and to disregard 
the interests of the schools. If a deficiency appears in the 
fund and the government is called upon to undertake the heavy 
expense of covering the deficiency and to save the fund from 
depletion, the government may refuse to give the required 
assistance on the ground that the members of the fund are 
responsible for its mismanagement and should, therefore, pro- 
vide for the deficiency. This type of a retirement board is 
found in eight of the twenty- four systems. 

A provision for a retirement board in which the members 
of the fund and the authorities are represented in equal num- 
bers avoids the objections raised to the foregoing plans. It 
assures equal representation of the interests of each party in 
all matters concerning the operation and development of the 
fund and it divides the responsibility of its safe management 
equally between them. The state system of Massachusetts is 

158 



Compulsory Participation 

provided with such a retirement board. It consists of seven 
members, three of whom represent the state. They are the 
commissioner of education, the insurance commissioner and 
the bank commissioner. The three other members are elected 
by the members of the fund. The seventh member is elected 
by the six members. The fact that the insurance and bank 
commissioners are on the board and that the secretary elected 
by the board is acquainted with actuarial problems assures to 
the board a technical knowledge which is essential to a sound 
financial management of the fund. 

Following is a table setting forth the organization of the 
retirement boards in those of the twenty-four systems studied 
in which both the government and the teachers are represented. 



159 



Teachers' Pension Systems in the United States 



Organization of Retirement Boards Having Representatives of Both 

Government and Teachers 

I— boards with government representatives in majority 



Systems 



Boston Retire- 
ment Fund 



New York State . 



Minnesota . 
Buffalo. . . . 



Philadelphia . 



New York City. 



Baltimore... 
Connecticut . 



Total 
Number 

of 
Members 
in the 
Retire- 
ment 
Board 



Members Representing the State 
or City 



Chairman of the Board of Com- 
missioners of the Sinking 
Funds; another chosen by the 
School Committee; and a third 
chosen by the Teachers' Re- 
tirement Fund Board 

Superintendent of Schools, Aca- 
demic Principal, elementary 
school teacher and two other 
members. (All appointed by 
the Commissioner of Educa- 
tion) 

3 — State Superintendent of 
Schools, Auditor, Attorney- 
General 

3 — Mayor, Superintendent of 
Education. Chairman of the 
Board of School Commissioners 



4 — President of the Board of 
Education, 2 members of the 
Board of Education, 1 member 
of the Department of School 
Superintendence 

4 — President of the Board of 
Education, Chairman of the 
Commission on Elementary 
Schools, Chairman of the 
Commission on High Schools, 
City Superintendent of Schools 

4 — Superintendent of Schools, 
Comptroller, 2 members of the 
Board of Education 

3 — Secretary of the Board of 
Education, State Insurance 
Commissioner, Bank Corn- 



Members 

Representing 

the 

Teachers 



2 — President of 
Principal's As- 
sociation and 
President of 
Women Tea- 
chers' Associa- 
tion 
1 



i6o 



Compulsory Participation 



Organization of Retirement Boards Having Representatives of Both 

Government and Teachers 

II — BOARDS WITH TEACHERS' REPRESENTATIVES IN MAJORITY 





Total 








Number 








of 


Members Representing the State 


Members 


Systems 


Members 


or City 


Representing 




in the 




the 




Retire- 




Teachers 




ment 








Board 






Illinois 


5 


2 — SuperintendentofEducation, 


3 






State Treasurer 




Wisconsin 


5 


2 — SuperintendentofEducation, 
State Treasurer 


3 


Michigan 


6 


1 — Superintendent of Education 


5 (1 woman) 


Cleveland 


6 


2— Members of the Board of 
Education 


4 


Chicago 


9 


3— Members of the Board of 
Education 


6 


New Jersey Re- 


9 


4— SuperintendentofEducation, 


5 


tirement Fund 




3 members appointed by the 
Governor 




New Orleans 


9 


4 — SuperintendentofEducation , 
3 members of the Board of 
School Directors 


5 


Boston Perma- 


11 


5 — SuperintendentofEducation, 


6 (3 men and 


nent Fund 




4 members of the School Com- 
mission 


3 women) 



III — BOARDS WITH EQUAL REPRESENTATION OF THE GOVERNMENT 
AND THE TEACHERS 



Systems 


Total 
Number 

of 
Members 
in the 
Retire- 
ment 
Board 


Members Representing the State 


Members 

Representing 

the 

Teachera 


Massachusetts. . . 
Permsylvania.... 


7 
7 


3— Superintendent of Education, 
Insurance Commissioner, Bank 
Commissioner; the seventh 
member elected by the six 

3 — Superintendent of Schools, 
State Treasurer, one member 
appointed by the Governor; 
the seventh elected by the six 


3 
3 



i6i 



PART II 

TYPICAL TEACHERS' PENSION SYSTEMS OF 
TO-DAY 



CHAPTER XI 
SYSTEMS WITHOUT RESERVES 

The teachers' pension systems existing in this country num- 
ber nearly a hundred. Yet only in the case of the Massa- 
chusetts system, the New York City system and the recent 
Pennsylvania system^ were actuarial estimates of future lia- 
bilities made at the time of establishment. With but few 
exceptions, therefore, the funds of the existing systems are 
found, as time goes on, to be inadequate. It will be of interest, 
and perhaps no little illustrative value, to outline the history 
of certain of these systems. 

In a number of these systems no reserves whatever were 
provided against liabilities, the government having assumed 
the responsibility to pay pensions as they matured by appro- 
priating each year the necessary amount. The characteristic 
features of this ''cash disbursement" plan were discussed in 
detail in a former chapter.' All these systems have com- 
mitted the grave error, to which systems operating on the 
cash disbursement basis are peculiarly liable, of underesti- 
mating the inevitable future growth of maturing pension 
obligations. 

In most cases the amount of the government's contribution 
to these funds has not been definitely limited by statute. This 
fact frequently results in a mistaken impression on the part 
of the members of the system, that whatever the expendi- 
ture of the system in the future may be, it is always assured 
of an unlimited backing by the government. 

The majority of the existing systems which belong to this 
type are of recent origin. They have already developed heavy 

^Also the new systems of New Jersey, Ohio and Vermont enacted in 
April, 1 91 9. 
'See p. I35f. 

i6s 



Teachers' Pension Systems in the United States 

disbursements, compelling the government to limit its support. 
Others have not had sufficient time to develop considerable 
disbursements, but it will not take long for them to become 
burdensome to the government. In a number of them the 
amount which the government disburses annually in pensions 
equals at present only i or 2 per cent of the amount it expends 
in salaries, but in the future it will reach 15 per cent or even 
more. 

Among the twenty-four systems selected for study the half- 
pay pension system of New Jersey and the systems of Maine 
and Pittsburgh fall in the class of systems without reserves. 

Pittsburgh Teachers' Retirement Association. The board 
of education of that city established in 1912 a retire- 
ment system by which a teacher who had served 25 years in 
schools of the United States, provided half of this time was 
served in the schools of Pittsburgh, would be eligible to retire- 
ment on a pension of $500. No contributions were required 
from teachers, the regulations providing that the board of 
education should appropriate each year the amount needed to 
pay the pensions of that year. In the year in which the fund 
was organized only thirty-five retirements were made, but 
during the second and third years, this number increased to 
seventy and eighty-five respectively. The rapid increase in 
the appropriation is shown below : 





Annual Appropriation 


Year 


for Pensions 


I912 


$ 7,000 


1913 


32,500 


1914 


39,400 


I915 


49,000 



This rapid increase in the cost of pensions to the city 
attracted the attention of the authorities and a report of the 
finance committee of the board of education, dated October 
26, 1916, declared: "It has been recognized for some time 
that all hope of continuing to add new pensions under the 
present plan must be abandoned." The board, therefore, 
discontinued granting new retirements. 

166 



Systems Without Reserves 

This action aroused considerable discussion. The teachers 
maintained that the original regulation of the board gave them 
an absolute right to pensions after 25 years of service and that 
the board had no right to revoke this regulation. The board 
on the other hand asserted that when the regulation was 
adopted it contemplated exercising its discretion and that its 
intention was perfectly clear in view of the fact that the state 
law did not fix the provisions for the various school boards, 
but allowed each to establish a pension system in any manner 
it might choose. 

Realizing that any amendment of the old and defective 
pension regulation would not rid the financially unsound sys- 
tem of the danger of bankrupting the city, the board deter- 
mined to liquidate the old system and to try to find a new one 
which would be financially sound, as generous as possible 
to the teacher, and fair alike to the two contributors — the 
taxpayer and the teacher. A resolution was passed by the 
board on February 20, 191 7, repealing the old pension rules 
so far as the grant of new benefits was concerned. 

In submitting the report of an actuary employed by it, the 
finance committee wrote : 

The committee made numerous attempts to provide a 
financially safe method of retiring teachers at an age earlier 
than 65. In every instance, however, the cost was found to 
be prohibitive both for the teacher and to the public. You 
will note especially that the plan provides: i. That all con- 
tributions made by the teacher shall, in every event, be 
returned to his or her designated beneficiaries with interest 
compounded at 4 per cent. The teacher has, therefore, a 
guaranteed savings account in addition to provision for a 
pension; 2, That the plan requires all teachers to participate; 
3, That the total payments made by teachers the first year 
would be about $108,054, and that the total budget provision 
to be msde by the board to cover present pensions and the 
installa ion of this plan the first year would be $200,000.^ 
The cost of retirement at age 60 would be about double each 
of the above. 

'Including the deficiencies with respect to the present force. 
167 



Teachers' Pension Systems in the United States 

The teachers were to contribute according to their age and 
sex from $1.50 to $11 monthly towards their retirement on 
a pension of $500 at age of 65, and the city to contribute 
equivalent amounts. These joint contributions were to be 
deposited to the individual account of each teacher and to 
draw compound interest. The rates of contributions were to 
be based upon standard mortality tables and the system was 
to operate on an actuarial reserve basis. 

The teachers objected to the plan because it provided for 
retirement only at the age of 65 and required exceedingly 
high contributions. Thereupon, the committee on retirement 
prepared another report in which it proposed the following 
modifications of the original plan : first, a provision by which 
all teachers above 40 years of age would be required to con- 
tribute at the rate fixed for age 40, i. e. a limitation of the 
teachers' contributions to a maximum of $5.20 per month 
instead of $11.45 P^'' month as under the first plan, and 
second, an option to retire between 60 and 65 on a reduced 
pension. The scale of pensions was to be as follows: 



Age 


Pension 


65 


$500 


64 


440 


63 


395 


62 


355 


61 


320 


60 


300 



The teachers gave no better reception to this revised plan 
than they had to the first plan. They objected to it "because 
of the age requirement of 65 years, and the small annuity at 
60 years of age."^ The report of the citizens' committee 
stated that* "the teachers desire a pension of $500 at retire- 
ment age of 60, but are unwilling or unable to pay the higher 
rates" required for such a pension at that age. The city is 
willing to contribute at the rates required for a $500 pension 

'Meeting of the Pittsburgh Teachers' Association, Feb. 13, 1917. Min- 
utes of the Pittsburgh Board of Education, Feb. 20, 1917, p. 282. 

^Report on Teachers' Pensions. Published in pamphlet form Jan. 23, 1917. 

168 



Systems Without Reserves 

at 65 years of age and, furthermore, to assume the payment 
of that part of the teachers' contributions which is above 
$5.20, besides assuming the entire obligation aggregating 
about $600,000 on account of the no annuitants retired under 
the old pension system, and considers it inexpedient for the 
present to go any further in its liberality. 

Whether the proposed system is adopted in its present form, 
or further modified, or not adopted at all, it is clear that the 
old unsound system can never be revived; the city will either 
establish a sound system or it will join the new state-wide 
system of Pennsylvania. 

New Jersey 35-Year Service Pension System. The agita- 
tion for a ''service pension payable entirely at public expense, 
and without any contribution from the teachers," began in 
New Jersey in the early nineties but suffered a severe defeat 
at that time. Instead of a service pension a teachers' retirement 
fund, supported entirely by the teachers themselves, was estab- 
lished. The agitation for a service pension, however, con- 
tinued and achieved its first success in 1903 in a rather acci- 
dental way. 

Some time in 1902, or in the beginning of 1903, a certain 
teacher, who had taught in Jersey City for more than 40 
years and had many friends in that city, met with a severe 
accident. It appeared that he was permanently incapacitated 
and would never be able to return to teaching. A group of 
teachers in that city attempted to obtain a pension for his 
benefit, as the school authorities had no power to grant one. 
The teachers, therefore, appealed to the legislature to give the 
school authorities the power. The bill framed by the teachers 
without providing a special fund for the purpose allowed any 
district board of education to pension on half pay any teacher 
who had served for more than 40 years consecutively in the 
same district, thus exactly covering the case of the particular 
teacher in question. The measure became a law on March 
5. 1903- 

169 



Teachers' Pension Systems in the United States 

It is curious to note that after the enactment of this law, 
the teacher, for whose special benefit it was passed, refused to 
avail himself of the pension. 

The requirements of the law were so high, and its pro- 
visions so particular, that for the next three years only two 
other teachers could qualify for the pension offered by it. 

In 1905, a recommendation was made by an actuary to a 
special committee, which investigated the Teachers' Retirement 
Fund, (another retirement system in New Jersey which is dis- 
cussed in the following chapter) that the law be so changed as 
to forbid any teacher receiving a "service pension" from the 
board of education to receive also an "annuity" from the fund. 
The enactment of such an amendment would have prevented 
the duplication of benefits which later on developed. The 
recommendation was, however, disregarded and on the con- 
trary a resolution was adopted at the meeting of the State 
Teachers' Association directing its committee to secure an 
amendment which would broaden the scope and lower the 
service requirements of the law. This was attained a few 
months later in 1906, when an amendment was obtained lower- 
ing the requirements to 35 years of service of which only 20 
years had to be in the same district. This opened the system 
to a much larger group of teachers, and during the following 
three months five teachers applied for retirement and received 
the pension. The number of pensions increased from seven 
to twenty-six during the following year and continued to 
increase rapidly from year to year as shown below : 



Year Ending 


Numbe 


r of Pensioners 


June 30 
1906 


on 


th 


e Retired List 
7 


1907 






26 


1908 






48 


1909 






65 


I9IO 






100 


191 1 






125 


I912 






155 


I913 






185 


I914 






222 



170 



Systems Without Reserves 

Meantime, in 1907, 191 1 and 1912 three other amend- 
ments had been passed. The first allowed not only the local 
boards of education but also any other body employing 
teachers to grant pensions; the second lowered still further 
the requirements by giving credit for service rendered in 
any other state; and the third broadened the interpretation 
of the service covered to include all persons "employed in the 
public school work." 

Until 1 914 the system was entirely local in its support and 
control. In that year an amendment provided for the central 
administration of the system by the state commissioner of 
education, and further liberalized the retirement conditions. 
The requirement of 20 years of service in the district in which 
the teacher applied for retirement was also struck out of the 
law ; the only limitation was that a teacher must have served 25 
of the 35 years in New Jersey.^ "Teacher-clerks and any per- 
son employed in any supervisory capacity," who had not pre- 
viously been subject to the law were now admitted to its bene- 
fits. The funds necessary for the payment of pensions were 
to be supplied from the apportionment from railroad tax 
devoted to the maintenance and support of schools which 
the comptroller distributed among the several counties. 

The result of the provisions of 1914 was that the number 
of pensioners and the total payments increased at a still more 
rapid rate as shown in the following table : 



Year Ending 
June 30 


Pensioners on 
the Retired List 


Amount of 
Pension Roll 


I915 
I916 


275 
348 


$150,000 

I r6.coo 


I917 
I918 


369 


211,000 
246,000 



At no time either before the establishment of the system 
or in the course of its subsequent amendment were the ques- 

'The teacher was made eligible to retirement under the following con- 
ditions : After 35 years of active service, 25 of which must have been per- 
formed in the state ; or after 70 years of age, if the last 20 years have been 
served in the state; or after 75 years of age, if 32 years have been served 
in the state; or after 35 years of service and 70 years of age, in case of 
disability. 

171 



Teachers' Pension Systems in the United States 

tions raised: What does the half-pay pension cost? What 
liabilities are assumed under the system, and what additional 
liabihties will accrue if the proposed amendments are enacted? 
In short, the system was established by chance, and was modi- 
fied in an off-hand way without any consideration paid to the 
financial obligations assumed. 

Since the retirement fund (described below^) offered a bene- 
fit of 60 per cent of salary, and the state pension offered 50 
per cent of salary, a teacher who could qualify under the 
two systems and whose salary was below $1300 could receive 
in the form of the two benefits more than the amount of his 
salary. Such a prospect was very attractive. Teachers who 
had 35 years of service but were still capable of teaching, and 
who would not have applied for retirement if they were 
entitled only to half pay, were now eager to retire. On the 
other hand, the teachers who could no longer perform their 
duties efficiently, but who had not completed 35 years of serv- 
ice, and who, therefore, could by retiring obtain only the 
annuity, but not the pension, were anxious to postpone their 
retirement until the time when they could qualify for both. 
The efficiency of the service thus suffered on account of early 
retirement of efficient teachers as well as from the postponed 
retirement of invalids. 

In 191 7, the legislature appointed a commission to investi- 
gate all the pension and retirement systems operating in New 
Jersey. Believing that it was important that the state should 
know what its total liabilities were, the commission had an 
actuarial estimate carefully prepared. This estimate showed 
that the cost of the half-pay pension on a reserve basis would 
amount to about 4 per cent of the payroll for new entrants 
and that the liabilities on account of the then 400 pensioners 
amounted to about $2,150,000, and the total liabilities on 
account of present pensioners and the prospective pensioners 
among the present teachers amounted to about $24,350,000. 
If the system continued to operate without providing an ade- 

'See page 183. 

172 



Systems Without Reserves 

quate reserve, the annual requirements for pensions, which 
now amounted to a few hundred thousand dollars and to 
slightly more than i^ per cent of the pay roll, would in a not 
distant future amount to more than a million dollars and the 
annual requirements would exceed lo per cent of the pay roll. 
It is plain that to prevent this tremendous increase of the 
burden, the system will have to be reorganized. It is prob- 
able that at the time of reorganization the question will be 
considered whether it will not be wise to supplant the two 
unsound systems, — the state pension and the retirement fund, 
— by one sound system supported by joint contributions of 
the state and the teachers and jointly controlled by them.^ 

Maine School Pension Fund. This is a fund in name 
only, for it has no capital. It is supported by a small appro- 
priation by the state from the school and mill tax fund. The 
teachers do not contribute. 

The plan of this system was prepared by a special com- 
mittee appointed for that purpose by the Maine Teachers' 
Association, and was revised by the members of the legisla- 
ture. It provided for an appropriation of $8,000 the first 
year and $25,000 annually thereafter with which to pay pen- 
sions of $150 to $250 according to length of service. One of 
the important changes made during the revision of the bill 
provided for the grant of half pensions to teachers who were 
retired before the enactment of the law. A provision of this 
kind is very rarely included in a pension system, for, aside 
from the question of the wisdom of a retroactive measure," it 
increases the immediate burdens of the system. 

The bill was passed on March 19, 1913." The fixed amount 
of the annual appropriation is one of the weakest features of 
the law. The experience of Maine will doubtless prove similar 
to that of other funds in that the amount of annual disburse- 

*Such a reorganization was effected by legislative enactment on April 
ID, 1919, as described in Chapter XVIIl. 

^See page 199 for a similar provision in Virginia. 
'Maine, Acts, 1913, ch. 75. 



Teachers' Pension Systems in the United States 

ments will grow from year to year. In the second year of 
the operation of this system thirty-five new pensions were 
added while only twelve were terminated and the pension roll 
carried $22,251, a sum dangerously near the limit allowed by 
law. Out of this amount over $12,000 — more than 50 per 
cent of the total — was expended on half pensions to 150 
teachers who had retired before the enactment of the law. 

It became evident at the beginning of the year 191 7 that 
the disbursements of that year would exceed the $25,000 
limit. Upon the recommendation of the state superintendent 
the legislature increased its appropriation to $27,500. As 
disbursements increase each year a larger appropriation must 
be requested. The state thus cannot long continue to bear the 
increasing burden, no part of which is borne by the teachers. 
The teachers too must sooner or later realize that it is to their 
advantage to contribute to the system in order to receive from 
it an additional benefit besides the small pension provided by 
the state. 



174 



CHAPTER XII 

SYSTEMS WITH INADEQUATE RESERVES: 
STATE SYSTEMS 

As already indicated the systems which have totally failed 
to recognize the necessity for a reserve are but few in number. 
In most systems this necessity has been appreciated but very 
inadequately. It has been thought of in the terms of protec- 
tion against some unexpected exigency and a source of supple- 
mentary revenue. The annual pension payments are met as 
they mature from the annual receipts of the system, i. e. by 
the "cash disbursement" method. The left-overs of the annual 
receipts (the so-called "surpluses") are set aside and are in- 
vested and form the so-called "reserve." 

The latter does not act as a true reserve, which is built from 
practically all receipts of the system and which serves as the 
source for meeting all pension obligations and the main basis 
of all its financial operations. It plays an entirely subordinate 
role in the operation of the system — a kind of appendix rather 
than the foundation of the system. Being so conceived and 
supported by the residues of a usually meager income it is nat- 
urally inadequate to protect the system against future heavy 
demands and assure its solvency. Of the twenty- four systems 
selected for study seventeen are of this type. They are as 
follows : 





States 






Cities 




I. 


Illinois est. 


in 1915 


I. 


Chicago 


est. in 1896 


2. 


New York 


" 1911 


2. 


Philadelphia 


" " 1907 


3- 


New Jersey Ret. F. " 


" 1896 


3- 


Cleveland 


" " 1907 


4- 


Minnesota " 


" 1915 


4- 


Boston Ret. F. 


" " 1900 


5. 


Wisconsin " 


" 1911 


5- 


Boston Per. F. 


" " 1908 


6. 


California " 


" 1913 


6. 


Baltimore 


" " 1909 


7- 


Virginia " 


" 1908 


7. 


Buffalo 


" " 1896 


8. 


Michigan 


" 1915 


8. 


New Orleans 


" " 1910 








9. 


Denver 


" " 1909 



175 



Teachers' Pension Systems in the United States 

In the systems of Virginia, Chicago, Buffalo, New Orleans, 
the two systems of Boston, in the old system of New York 
City, in the New Jersey Retirement Fund, altogether in eight 
of the seventeen systems, the disbursements have at one time 
or another exceeded their statutory income, which has resulted 
in a reduction of benefits, in the discontinuance of new retire- 
ments, and in the introduction of new laws to relieve the 
situation. 

The other systems, nine in number, are still very recent. 
This is the only reason why they have not as yet failed. The 
systems of Illinois, Minnesota, Michigan and California have 
had but a short existence, but the first two are already under 
investigation. The New York and Wisconsin systems were 
estabhshed in 191 1, those of Baltimore and Denver in 1909, 
of Philadelphia and Cleveland in 1907. All these are still 
in the accumulative stage. Their revenues still exceed their 
disbursements and yield balances which create an impression 
of apparent prosperity and financial security. But soon their 
growing disbursements will exceed their revenues; and then 
these funds, like those of Virginia, New York and Boston, 
and others mentioned above, will be in a critical condition 
and will start on a rapid decline. A better idea of the finan- 
cial condition of these systems may be formed if each is dis- 
cussed separately. A separate analysis of each fund is, there- 
fore, presented below, the Chicago fund being described in 
a separate chapter. 

The financial arrangements for all the other funds in this 
country which have inadequate reserves are similar to those 
of the systems which are analyzed in detail in the following 
pages. The bankruptcies or sudden reductions of benefits 
which resulted from these arrangements in Minneapolis, Mil- 
waukee, Providence and Newport are similar to those devel- 
oped in New York City and Boston. 

Illinois Teachers' Pension and Retirement Fund. This 
system became effective on July i, 191 5, and is compulsory 

176 



Systems With Inadequate Reserves: State 

on those subsequently entering the service. Teachers in the 
service at the time of enactment have the option until Sep- 
tember I, 1920, to become members. Up to June 30, 1916, 
only about 1,500 of the total number of about 22,500 teachers 
in the state elected to join. They were undoubtedly the older 
teachers who expected to retire immediately or in a few years. 
Approximately 1,600 teachers newly entering the service auto- 
matically became contributors. The total membership, there- 
fore, then numbered about 3,000 teachers. 

Up to June 30, 191 6, a total of 301 teachers were retired 
on the full annuity of $400. Of this number 225 were women 
and 76 were men. Twenty persons were retired because of 
disability on a smaller annuity in proportion to the number 
of years served. The majority of the retirements were 
granted at the close of the year. The expenditures during 
1916 were, therefore, very sinall; they amounted to only 
about $8,500. The disbursements of 191 7, however, were 
considerable since the annuity roll amounted to more than 
$120,000. 

The system is managed by a board of trustees consisting 
of five members, the superintendent of public instruction, the 
state treasurer and three contributors or annuitants elected 
by the contributors and annuitants. 

An annuity of $400 is granted on retirement after 25 years 
of service (of which a minimum of 15 years must have been 
taught in the schools of Illinois), provided the applicant is 
at least 50 years of age. A proportionately reduced annuity 
is paid on disability retirement after 15 years of service. The 
applicant must have contributed in all $400, or else pay the 
deficiency with 4 per cent interest. No refunds of contribu- 
tions or other benefits are granted upon resignation, dismissal 
or death. 

The income of the fund is derived from two sources — the 
members of the fund and the state. The members contribute 
according to the number of years they have taught; those 

177 



Teachers' Pension Systems in the United States 

with less than lo years contribute $5 per year; those with 
more than 10 years but less than 15 years, $10; and, finally, 
those with more than 15 years of teaching experience con- 
tribute $30 per year. No teacher is required to contribute for 
more than 25 years. The state contributes an amount equal 
to one-tenth per mill of the assessed valuation of property. 

A few months after the system was established it came 
under the investigation of the Illinois Pension Laws Commis- 
sion, together with the police, firemen and other systems 
operating in Illinois, and the following quotation from its 
report which refers to the unsound condition of all the pen- 
sion systems in Illinois, including the state teachers' system, 
is interesting: 

The general condition of pension systems operating under 
the laws of Illinois may be correctly described as one of insol- 
vency. That is to say, viewed from the standpoint of sound 
finance and of having the necessary reserves to carry out the 
payment of pensions' as provided in the laws, there are 
immense deficiencies in the existing funds. In short, the 
financial provisions are entirely inadequate for paying the 
stipulated pensions when due. It may be well to emphasize 
here that there is nothing more erroneous than the common 
view that so long as the amount in a pension fund is increas- 
ing all is well with it. To be sure, some of these funds are 
increasing, but that is no indication of their sufficiency, and it 
is strange how completely satisfying such increase is to many 
participants even if the fund is certainly inadequate.^ 

According to the estimate of the commission the ultimate 
annual pension payments under the present system will amount 
to between 7 and 12 per cent of the annual salary payments. 
Yet the fund is provided with a teachers' contribution which 
averages only a little over i per cent of the annual salary 
payments, and will in the future average a lesser proportion 
as salaries increase. True, disbursements of from 7 to 12 
per cent will not be required for a number of years. In the 
beginning the fund will be more than sufficient to pay the 

^Illinois Pension Laws Commission Report, 1917, p. 272. 

178 i 



Systems With Inadequate Reserves : State 

pensions of retiring teachers, especially in view of the fact 
that the membership of the fund and its disbursements are 
small and that the state appropriation augments the fund. 
Soon, however, an amendment of the law will become neces- 
sary which will give another oportunity for those to enter the 
fund who did not enter it in 191 5. So long as the teachers' 
contributions are fixed at an almost insignificant rate, every 
additional member will increase the liabilities of the fund 
without proportionately increasing the assets and will add a 
new claim against future state appropriations which are 
limited to a small portion of the mill tax. The disbursements 
will increase at a more rapid rate than the income and will 
eventually exceed it. It is very probable, however, that the 
managers of the system with the aid of an enlightened public 
opinion will bring about a reorganization of the system on a 
sound basis long before this happens. One of the officers of 
the fund has recently stated that the law "needs revising inas- 
much as there is no provision made for an actuarial investi- 
gation and the age for retirement is perhaps too low. It seems 
to me that any sound permanent retirement fund must be 
founded upon actuarial investigation and a thorough research, 
such as would lead to the cost of maintenance of the fund." 

New York State Teachers' Retirement Fund. In the 
year 1910 the State Teachers' Association of New York, the 
Academic Principals Association, and the Council of Super- 
intendents appointed a committee to get in touch with the 
education department in order to prepare a bill and to secure 
its enactment. The bill introduced passed the legislature on 
June 26, 191 1 and was amended in 1913 and 1914.^ 

The law applies to all teachers except those covered by local 
funds. The law provides, however, that the state fund must 
take over any local fund if more than two-thirds of the 
teachers of the respective locality vote in favor of a merger. 

'New York, Acts, 1911, ch. 449; 1913, ch. 511; 1914, ch. 44. 
179 



Teachers' Pension Systems in the United States 

The following retirement funds have availed themselves of 
this provision and have been merged with the state fund : 
Poughkeepsie established in 1902 



Niagara Falls. 

Troy 

Elmira and Schenectady 

Watervliet and Yonkers 

Nassau and Saratoga Counties. 



1904 

1906 
1907 
1908 
1910 



The following cities and county still have local funds and 
remain outside of the state system : 

New York City established in 1894 

Buffalo " " 1896 

Syracuse " " 1897 

Rochester " " 1905 

Albany " " 1907 

Cohoes " " 1908 

Mt. Vernon " " 1909 

Westchester County (except Yonkers).... " " 1909 

The board of retirement consists of five members all of 
whom are appointed by the commissioner of education; one 
of them at the time of appointment must be a superintendent 
of schools, one an academic principal, and one an elementary 
school teacher. One of the five must be a woman. 

An annuity of one-half of the average salary of the last 
five years (max. $600) is provided upon retirement after a 
minimum of 25 years of service, of which the last 15 must have 
been served in the schools in the state. Proportionately 
smaller annuities are paid on disability after minimum of 15 
years' service. No refunds of contributions are made to those 
who resign or are dismissed or to the dependents of those 
who die. 

These benefits were to be paid out of a fund derived from 
a I per cent deduction from teachers' salaries. The unex- 
pended balances were to be set aside each year to build up 
the capital of the fund. No estimates of the cost of benefits 
were made. The commissioner of education stated in 191 3 
that "there is not reliable data at the present time to determine 
accurately the number of teachers in the state who are entitled 
to be retired under this law or the amount required to meet 

180 



Systems With Inadequate Reserves: State 

annuities."^ It was estimated, however, that if out of 1,200 
teachers, who had more than 25 years' service, 300 should re- 
tire, the income would exceed the disbursements by about 
$25,000, and that if 600 should retire a deficiency of more than 
$40,000 would appear. But even this indefinite computation 
covered only one year and did not take into account the fact 
that a rapid increase in the disbursements was bound to de- 
velop. A faint suspicion that the fund might prove insufficient 
to pay all annuities is evidenced in the following passage in the 
commissioner's report :^ 

It has been confidently believed by those who have been 
giving this matter careful attention for two or three years 
that sufficient endowments will be made to the fund to avoid 
the necessity of the legislature making appropriations to meet 
deficiencies. It would be a deserved compliment to the teach- 
ing force of the state if some of our pubHc spirited citizens 
should make sufficient gifts or endowments to this fund to 
make the income sufficient to pay all annuities. 
It was thus hoped that should the fund be threatened with 
disaster private philanthropy would come to the rescue. Had 
an actuarial investigation of the fund been made at that time, 
it would have shown that disbursements were bound to exceed 
the receipts from the i per cent contribution, and that annual 
deficiencies instead of surpluses were bound to develop and 
disaster result in five or six years. 

During the first year only ten retirements were made, the 
disbursements amounted to only $2,000, and the greater part 
of the income was unexpended and carried to investment. 
During the second year, however, the number of retirements 
jumped from 10 to 152 and the disbursements from $2,000 
to over $40,000. In view of this alarming increase it became 
apparent that the income would soon be insufficient, and an 
appeal was made to the legislature to contribute to the fund 
an amount equal to the teachers' contributions. An act to 
this effect was passed in 19 14, and as a result of the new law 



'Report, 1912, p. 27. 
'Report, 1912, p. 28. 



181 



Teachers' Pension Systems in the United States 

the contributions in 191 5 were at once doubled. This increase 
has postponed for the time being the disaster which, however, 
is bound to happen within a few years. 

The following figures illustrate the rapid increase in the 
number of retirements and the amounts of disbursements dur- 
ing the last four years. The total number of retirements 
rose from about 150 in July, 19 13, to almost 700 in July, 191 7, 
and the amount of annual disbursements grew during the 
same period from $40,000 to almost $200,000. The retire- 
ment board then adopted a resolution raising the require- 
ments for service retirement so that an applicant who is not 
disabled must either have 35 years of service and be 60 years 
of age, or if he has less than 35 years (but more than 25), 
must be 65 years of age. 

A bill was also introduced in the legislature making dis- 
cretionary the acceptance by the state fund of any local fund 
which desires to merge with it. The point is that some of 
the local funds having been longer in operation are nearer 
collapse than is the state fund. The legislative committee, 
however, refused, and justly so, to endorse any measure except 
one which would provide for a reorganization of the insolvent 
system. It held that the proposed measure would merely help 
to postpone reorganization and result in the increase of the 
deficiency which the future generations will have to discharge. 

The officers responsible for the management of the state 
system have endorsed the actuarial reorganization of the 
New York City system. They appreciate the imperfection 
of their own system and contemplate placing it on an actuarial 
basis. The considerable actuarial data compiled by the New 
York City commission and the scientific pension plan which it 
prepared after a three-year study of the problem will un- 
doubtedly facilitate their difficult task. 

The sooner the reorganization is effected, the better it will 
be for the majority of the teachers who are inadequately pro- 
tected under the present system; for the longer it operates 

182 



Systems With Inadequate Reserves : State 

the larger will be the number of teachers with claims of 
"vested rights" in it. 

The following sets forth the principal facts relative to the 
New York state system in April, 19 17. 

Membership 24,000 

Number of annuitants 669 

Annuity roll $187,182 

Capital 572,000 

Average age at retirement 57 years 

Average length of service 31 years 

New Jersey Teachers' Retirement Fund. The New Jer- 
sey Teachers' Retirement Fund is the first state-wide sys- 
tem for the retirement of teachers to be established in this 
country/ It provides an annuity of 60 per cent of the average 
salary for the last five years (min. $250, max. $650) upon 
retirement after 20 or more years of service, if the teacher 
can prove disability. The fund operates on a tontine basis, 
no refunds of contributions or other benefits being provided 
for those who resign, or are dismissed, or who die before 
completing the required period of service. It is managed 
by a board consisting of nine members — the superintendent 
of public instruction, three members, not teachers, appointed 
by the governor, and five teachers elected by the members of 
the fund. The financial history of the fund during the 
twenty-one years of its operation may be divided into four 
periods. These periods were identical in their leading aspects 
— each began with an excess of income over disbursements 
only to have the latter reach or outstrip the regular income. 
The fund was opened on a voluntary basis in 1896 with 
a membership of about 2,500 teachers out of a total of about 
5,000. The income was to consist of a contribution by the 
members of i per cent of their salaries. In addition, i per 
cent was deducted from the annuities granted and it was 
hoped to augment the regular income by obtaining donations 
and legacies and arranging bazaars and entertainments. No 
disbursements were made during the first year. Thirty-five 
hundred dollars were paid out the second year and almost 

^The history of its establishment w^as described at length on page 38. 
183 



Teachers' Pension Systems in the United States 

$5,000 during the third year. The membership not only 
did not increase but even decHned, and the districts were 
irregular in transmitting the dues. The increase in the dis- 
bursements with the resulting reduction in the annual surplus 
is shown below ■} 

Year Ending Annual Suiplus 

June 30 Receipts Disbursements (Excess of Income 

Over Disbursements) 

1897 $12,400 $12,400 

1898 15,300 $3,500' 11,800 

1899 13,300 4,700' 8,600 

The decrease in the membership and the annual surplus 
was alarming. It was apparent that in a few years the dis- 
bursements would overtake the income unless membership 
was increased or new sources were added, or retirements 
restricted. 

Accordingly in 1899 an amendment was secured extending 
membership to teachers who had not become members in 
1896 and who might now wish to enter, and containing certain 
restrictions as to retirement. A permanent organization was 
effected for conducting membership campaigns and soliciting 
funds. Through the energetic efforts of this organization the 
membership was increased and the income supplemented from 
special entertainments which were arranged and from dona- 
tions and legacies which were obtained. These sources yielded 
almost $7,000 in 1900 and over $3,000 in 1901. During the 
succeeding two years, however, the increase in the disburse- 
ments exceeded the increase in the income, with a result that 
the surplus decreased, as shown below, falling under the 
amount which was set aside at the end of the first period : 

It thus became apparent that the previous increase of income 

Year Ending Annual Surplus 

June 30 Receipts Disbursements^ (Excess of Income 

Over Disbursements) 

1900 $21,100 $8,200 $12,900 

1901 20,800 10,400 10,400 

1902 20,300 12,600 6,700 

'The figures in this and the following tables are compiled in round 
numbers to the nearest hundred from the figures given in the N. J. School 
Report, 1913 (vol. i, p. 506-7). 

"Includes administrative expense, $2,600 in 1898 and $1,200 in 1899. 

^Includes administrative expense : $1,700 in 1900, and $1,800 annually the 
following two years. 

184 



Systems With Inadequate Reserves: State 

was insufficient and that a third increase was necessary. 
Therefore, another amendment to the law was obtained in 
1902 which offered certain privileges to the teachers who 
would enroll during the next nine months. The contributions 
of all teachers who would become members after January i, 
1903, and who would then have more than 10 years of serv- 
ice were to be increased to 2 per cent. A great membership 
campaign was organized and about 900 teachers were enrolled. 
Immediately the income rose about $8,000 and the amount 
added to the capital about $5,000. As the disbursements con- 
tinued steadily to increase during the next three years, the 
amounts added to the capital fell far below the already low 
mark set by the preceding period : 



^ear Ending 






Annual Surplus 


June 30 


Receipts 


Disbursements^ 


(Excess of Income 
Over Disbursements) 


1903 


$28,400 


$16,900 


$11,500 


1904 


26,400 


20,900 


5,500 


1905 


28,800 


23,800 


5,000 


1906 


34,800 


29,100 


5,700 



The operations of the year 1905 resulted in a still smaller 
surplus, and those of 1906 would have resulted in a defi- 
ciency had not a strenuous effort been made to raise funds 
by means of entertainments and donations. In 1905 almost 
$3,000 had to be raised and in 1906 over $10,000 (the largest 
and practically the last collection in the history of the fund) 
in order to cover the deficiency. Again the fund was involved 
in financial difficulties and this time the difficulties were greater 
than before. 

To relieve the situation a third amendment to the law was 
prepared and its passage secured in 1906, which, in the first 
place, began a liquidation of the old i per cent fund and estab- 
lished in its place a new fund with higher rates of contribu- 
tions,^ and in the second place compelled all teachers appointed 
in the future (after January, 1908) to enter the new fund. 

^Includes administrative expense: $1,900 in 1903; $1,600 in 1904, and 
$1,500 the following two years. 

*Those with less than 10 years of teaching experience at the time of 
becoming a member were made to contribute 2 per cent, of their salary, 
those with more than 10 but less than 15 years, 2^ per cent., and those 
with more than 15 years, 3 per cent. 



Teachers' Pension Systems in the United States 

During the first two years the results were very disappointing 
as the majority of the teachers refused the higher rates. The 
receipts increased because of the higher contributions of those 
who accepted the act, but not sufficiently to overcome the 
increase in the disbursements. As a result, the annual surplus 
continued to fall, as shown below : 



fear Ending 






Annual Surplus 


June 30 


Receipts 


Disbursements^ 


(Excess of Income 
Over Disbursements) 


1907 


$39,600 


$36,400 


$3,200 


1908 


56,400 


54,800 


1,600 



In the meanwhile the managers secured another amend- 
ment (1907) which increased the annuity to 60 per cent of 
salary, offered various other inducements to the teachers who 
would accept the new act, and postponed closing the doors 
of the fund for another year. But teachers were reluctant 
to enter it. All interest in the fund apparently died out. 
Then during the last four months of 1908, the managers 
launched a great membership campaign throughout the entire 
state and succeeded in enrolling almost 4,000 teachers. The 
large number of new contributors and the higher rate of their 
contributions increased the receipts for 1909 and 19 10, re- 
spectively, to double and triple the totals for 1908, and gave 
the fund the largest annual surplus ever obtained. These first 
two years of operation at the higher rate of contributions 
have almost doubled the capital accumulated during the pre- 
ceding twelve years : 



.Year Ending 
June 30 

1909 


Receipts 
$97,700 


Disbursements 
$64,600 


Annual Surplus 
(Excess of Income 
Over Disbursements) 
$33,100 


I9IO 


152,100 


87,100 


65,000 



Had the fund not changed from a voluntary to a com- 
pulsory basis and increased its membership by the great cam- 
paign of 1908, it would have faced another annual deficiency 
in 1909, and would have been forced to draw upon its reserve,. 
then totaling about $95,000, which would probably have been 

^Includes administrative expense : $600 in 1907 and $1,500 in 1908. 
186 



Systems With Inadequate Reserves : State 

expended in five or six years, in spite of the annual automatic 
increases in the compulsory membership and the emergency 
collections and entertainments. However, with the contribu- 
tions obtained from the younger teachers who were enrolled 
in 1908 and also from the new appointees who were compelled 
to contribute, the fund has been able to continue making pay- 
ments to its old annuitants and to grant new annuities to its 
old members, and, furthermore, to increase its capital almost 
400 per cent. 

Meanwhile, the disbursements are continuing steadily to 
increase at a more rapid pace than the income. Each year the 
unexpended portion of income added to the capital becomes 
smaller and smaller as shown by the following table : 

Year Ending Annual Surplus 

June 30 Receipts Disbursements (Excess of Income 

Over Disbursements) 

191 1 $174,800 $111,900 $62,900 

1912 192,600 135,700 56,900 

1913 196,900^ 154.400 42,500 

1914 231,900^ 183,700 48,200 

1915 235,400 207,200 28,700 

1916 264,100 231,000 33,100 

1917 277,000 258,000 19,000 

1918 276,800 276,100 700 

It is all too evident that soon there will be no surplus, the 
disbursements will again exceed the receipts, and the fund 
will develop an annual deficiency unless another temporary 
relief is obtained by again increasing the contributions, or a 
permanent improvement is effected by providing an adequate 
income actuarially determined. 

The fund having been criticized by the Carnegie Foundation 
as being unsound, the State Teachers' Association decided on 
an actuarial investigation and offered to defray the expense of 
it. The cooperation of the retirement board was secured and 

^A large part of the dues (about $15,000) creditable to 1913 had not 
been credited when the state treasurer's books closed on June 30, 1913, 
and were subsequently credited to the year 1914. The receipts and surplus 
shown here for the year 1913, as somewhat lower than those of 1914, were 
therefore in reality higher. An adjustment of these figures would have 
shown a more gradual decline in the annual surplus. 

187 



Teachers' Pension Systems in the United States 

an actuary was engaged/ His report, submitted in November, 
191 7, showed that the liabilities of the fund on account of 
annuities now outstanding amount to $2,324,651.77. Its total 
present assets are only about $485,000. The fund is, therefore, 
insolvent even on account of those liabilities alone. But 
this is only a relatively small portion of the total liabilities of 
the fund ; by far larger are the liabilities on account of all the 
members now in active service and who have been for years 
contributing to the fund. The total liabilities amount to many 
millions of dollars, and the total assets, according to all indica- 
tions, are insufficient to offset them. This means that the great 
majority of teachers are still contributing for the benefit of 
others. It should be added that besides the thousands of 
teachers whose interests are thus sacrificed as a result of the ap- 
parent insolvency of the fund, there are a number of others 
whose interests would be sacrificed even if the fund were solv- 
ent, namely, all who withdraw from the service before retire- 
ment whether through resignation, dismissal or death. Under 
the law governing the fund, they forfeit all their contributions 
and are thus penalized for the benefit of those who stay in the 
service. 

In December, 1918, the Bureau of State Research of the New 
Jersey State Chamber of Commerce issued a report^ present- 
ing the entire history of the fund and analyzing its present 

^Previous to this investigation the fund was investigated in the year 1913 
by a committee elected by members of the fund. The inherent weakness 
of the fund and the need for actuarial methods were not appreciated by the 
commissioners, who wrote : "The New Jersey law is the result of years 
of experiment and progressive legislation. The present law, while very 
comprehensive, is simple. It requires no actuarial knowledge to determine 
the amount of annuities ; it has none of the insurance intricacies of the 
Massachusetts law. The questions that arise are not actuarial questions, 
but questions of fact and the trustees are entirely competent to answer 
them." It optimistically reported, "Your committee rest confident in the 
perpetuity of the fund." Report of special investigating committee 
authorized at the annual convention of county delegates elected by the 
members of the New Jersey State Teachers' Retirement Fund, Sept. 27, 
1913, submitted Sept. 26, 1914, p. 15 and 23. 

"Teachers' Retirement Systems in New Jersey, Their Fallacies and Evo- 
lution. Prepared by Paul Studensky. State Research, Consecutive Num- 
bers, 10 and 12, 1918, 88 p. 

188 



Systems With Inadequate Reserves: State 

condition. The report pointed out the anomaly of double bene- 
fits resulting from the coexistence of the retirement fund 
and the state pension.^ Nominally, the two systems serve 
different purposes — the retirement fund protects the teachers 
against disability, and the state pension against old age. In 
reality, however, both grant superannuation benefits. Since 
191 1 the great majority, about two-thirds, of those who are 
being placed on the annuity list of the retirement fund are at 
the same time pensioners of the state system. Their total re- 
tirement benefits are, therefore, abnormally large when com- 
pared with the salaries they were receiving while in active serv- 
ice. For those whose salaries are less than $1,300, i. e. for the 
majority of those retiring on double benefits, the benefits are 
larger than the salaries, as may be seen from the following 
table : 

10 teachers enjoying benefits of 70% to 75% of salary 
78 teachers enjoying benefits of 75% to 100% of salary 
86 teachers enjoying benefits of 100% to 110% of salary 
189 teachers enjoying benefits of 110% of salary, and more 

363 teachers enjoying benefits averaging 103% of salary 

There is obviously no justification for paying a teacher after 
retirement more than she earned while in service. Moreover, 
the effect upon the efficiency of the schools may prove very 
prejudicial, as there is a strong incentive for quitting the serv- 
ice as soon as the minimum requirements for retirement are 
met. 

The report of the bureau of state research shows con- 
clusively that no further makeshifts in financing either the 
fund or the state pension can improve the situation, and that 
a reorganization on an actuarial basis is urgently needed. This 
raises the question whether this reorganization should be 
effected separately for each system, or whether the systems 
should be consolidated into one. A separate reorganization 
would involve for the teachers the necessity of carrying all 

'The New Jersey State Pension System was discussed in the preceding 
chapter. 

189 



Teachers' Pension Systems in the United States 

the burden of the future HabiHties of the fund and supplying 
the many milHons needed to cover its past deficiencies ; on the 
other hand, it would necessitate the appropriation by the state 
of perhaps as much as a million dollars annually for the 
support of the state pension system on a reserve basis, and 
the duplication of benefits would continue. If, on the con- 
trary, a single system were established and supported by 
joint contribution, the burden upon either party might be 
considerably less and the system could "meet the economic 
needs of every member of the system, effectively relieve the 
schools of the superannuated and disabled, insure the efficiency 
of the teaching staff, and benefit the public at large." 

After an exhaustive actuarial investigation which showed 
that the retirement fund had a deficiency of about $15,000,000 
(liabilities of $19,000,000 against assets of $4,000,000) the 
pension and retirement fund commission, which, as already 
stated, was appointed by the legislature of 19 17 to investigate 
all the pension funds in New Jersey, became thoroughly con- 
vinced that the teachers could not by their own contributions 
make the fund solvent and that the situation could be effec- 
tively remedied only by a merger of the two systems. It, there- 
fore, undertook to frame a bill providing for the establishment 
of a new retirement plan jointly supported and administered by 
the teachers and by the state and founded on an actuarial re- 
serve basis. ^ 

Minnesota Teachers' Insurance and Retirement Fund. 

The state-wide system of Minnesota is one of the most recent 
systems in this country, the law for its establishment being 
enacted April 20, 1915.^ 

The system applies to all public school teachers in Minne- 
sota, outside of Minneapolis, St. Paul and Duluth, where 
separate systems exist. Teachers who enter the service after 
July I, 1915 automatically become members of the fund, 
whereas those already in the service are given until September 

'The bill became a law on April 10. 1919. For the description of the 
new retirement plan see Chapter XVIII. 
^Minnesota, Acts, 1915, ch. 199, Apr. 20. 

190 



Systems With Inadequate Reserves: State 

I, 191 7 to join it. It is managed by a board of trustees which 
consists of the state superintendent of education, the state 
auditor, the attorney general and two members of the fund 
association. 

The revenues of the fund consist of annual contributions 
by the state and by the teachers. The state contributes one- 
twentieth of a mill tax on all the taxable property in the state, 
excluding Minneapolis, St. Paul and Duluth. This source 
will yield, during the first few years, about $60,000 annually.^ 

The teachers are divided into two classes : Those receiving 
salaries under $1,500 contribute $5 annually during the first 
five years, $10 the second five years, $20 the next ten years 
and $30 the last five years ; whereas, those with salaries over 
$1,500 contribute during the first ten years i^^ per cent of 
salary (max. $20), and during the last fifteen years 2 per 
cent (max. $40). No contributions are required after twenty- 
five years. 

Thirty years of service, fifteen of which must have been 
served in the state, entitle a teacher to a pension of $350. 
This pension increases by $30 for each additional year of 
service up to a maximum of $500. At disability after fifteen 
years proportionate pensions are paid, and upon death one- 
half of the member's contributions is refunded to his depend- 
ents, if no annuity has been drawn. 

A member is allowed credit for services rendered prior 
to the enactment of the law provided he has paid arrearages 
at the above rate. In case a member retires before he has 
paid in the full amount of back assessments his annuity is 
credited until the required amount is made up. 

The provision of the Minnesota system granting pensions 
after 20 years of service, regardless of age, is almost unique 
in its liberality. It would never have been introduced had 

'During the year ending June 30, 1917, the fund received $80,700 in 
back assessments from teachers, $27,500 in assessments from new entrants, 
and $57,000 from taxes. The disbursements on annuities aggregated 
$49,300. 

191 



Teachers' Pension Systems in the United States 

its real cost been ascertained. It allows retirement at as early 
an age as 40, although the life expectancy and the cost of 
retirement benefits at that age are considerable. However, 
this provision is not of primary importance. It merely shows 
how far the founders of a system may err when they do not 
know the cost of retirement benefits. The system would be 
financially unsound even if the retirement condition was 
increased to thirty or thirty-five years, for its contributions and 
benefits are not based upon mortality rates and interest tables, 
and it does not operate on a reserve basis. 

A preliminary survey of the Minnesota fund was made 
soon after its establishment, at the request of the board of 
trustees, by Mr. E. S. Cogswell, former secretary of the 
Massachusetts Teachers' Retirement Fund. Asked as to his 
conclusions concerning the financial condition of the fund, 
he replied with the following statement: 

As the time for joining the Fund x\ssociation for the 
teachers in service at the time the act was passed does not 
expire until September, 19 17, it is impossible to make a com- 
plete report upon the affairs of the Fund before another year 
has elapsed. I am convinced, however, that even under very 
favorable circumstances the Fund as at present constituted by 
law, cannot pay in the long run more than 40% of the annuities 
mentioned in the act. Since the investigation was made, the 
board of trustees voted to pay only 80% of the annuities due 
October i, 19 16, as the law provides that the annuities may be 
prorated if the trustees believe the condition of the Fund 
requires it. 

Of course, as in the case of other pension funds just start- 
ing, the current income is considerably in excess of current 
disbursements, but it will be only a few years before the 
disbursements will exceed the income unless the annuities are 
still further reduced. 

The management of this Fund is efficient and progressive, 
and will at the proper time recommend to the legislature 
changes in the law so that the Fund may be placed upon a 
more solid financial basis. 

192 



Systems With Inadequate Reserves : State 

Wisconsin Teachers' Insurance and Retirement Fund. 

This system was estabHshed on June 12, 1911/ at about the 
same time as the New York state system. It applied to all 
public school teachers in the state outside of Milwaukee, where 
a separate system exists, and it made membership compulsory 
for all teachers entering the service after September i, 191 1. 

Teachers already in the service were given until September 
I, 1912, to decide whether or not they would join the fund. 
It is interesting to note that out of 9,168 teachers, for whom 
the law was elective, only 2,168 made application before Sep- 
tember I, 191 2, whereas as many as 7,000, more than three- 
fourths of the total number, which represented the bulk of the 
younger teachers, did not elect to come under the law. 

The number of contributors to the fund increased rapidly 
during the next five years. On September i, 191 7, out of a 
total of 15,500 teachers outside of Milwaukee, as many as 
12,100 belonged to the fund, whereas only 3,400 remained 
outside. Out of the latter number 10,060 contributed i per 
cent of their salary, and 1,390, 2 per cent. 

The teachers contribute i per cent of salary the first ten 
years (max. $15) and 2 per cent for next fifteen years (max. 
$30). The total of twenty-five contributions must not fall 
below the amount of the first year's pension nor exceed $600, 

The state contributes to the fund from certain school taxes^ 
ten cents for each person of school age. 

These revenues can provide for only a small part of the 
real cost of the benefits, which are fixed by the law as follows : 
A pension of $12.50 for each year of service on retirement 
after twenty-five years (of which eighteen must have been in 
the state), or upon disability after eighteen years, and a refund 
of one-half of the member's contribution without interest. 

This Wisconsin state-wide system is more or less similar 
to the Milwaukee system, which was established by a state 
law in 1907, and amended in 1909 and 191 1. The fate of the 
Milwaukee system is, therefore, of special significance. After 

^Wisconsin, Acts, 191 1, ch. 323, June 12. 
193 



Teachers' Pension Systems in the United States 

a few years of apparent prosperity, when the fund had accum- 
ulated a reserve of about $100,000, the disbursements absorbed 
the revenues, and the board was forced to reduce the benefits 
from $400 to $300.^ An amendment of the law was enacted^ 
which restricted the retirements by increasing the service 
requirements to 35 years, except for persons over 65 years of 
age, in whose case only 25 years of service are required. It 
will undoubtedly be necessary soon to introduce a similar re- 
striction in the Wisconsin system, because the 25-year service 
requirement permits retirement at a very low age and thus 
results not only in an undue financial burden on the system, 
but in the premature loss of efficient teachers. That the 
teachers are availing themselves of the low requirements of 
the system may be seen from the fact that the average age of 
229 women, who have retired since the law went into effect, 
was only 52.7, and the average age of the 44 men was 55.8 
years. This indicates that a considerable number of persons 
are retiring before 50 years of age. The average annuity of 
the women was $358.91 and of the men $365.98. The cost 
of these annuities at these early ages is considerable. Accord- 
ing to the mortality experience obtained among the New York 
City teachers, a woman teacher retired at 53 years of age 
would live and draw her annuity for about 21.07 years. The 
cost of the average annuity of $358.91 at that age amounts 
to $4,791,45. The 273 annuitants have paid into the fund 
a total of about $91,000, yet they will receive benefits the 
value of which exceeds $1,000,000, or about eleven times the 
amount they have paid in. 

How long will the fund be able to pay the tremendous excess 
over and above the amount which it has received from the 
annuitants? During the first six years the fund accumulated 
a balance of about $500,000 which created an impression of 
apparent prosperity and financial security. Yet in reality this 
balance is insufficient even as a reserve against the liabilities 

^Milwaukee Sentinel, Feb. 17, 1916. 
^Wisconsin, Acts, 1917, ch. 225. 

194 



Systems With Inadequate Reserves: State 

under the existing annuity roll, let alone the reserve necessary 
to assure the future payments of benefits to present active 
members. The annuity roll has already increased from 
$11,193 in 1913 to $y2,y;^4. in 191 5, and to almost $90,000 in 
191 7. In a few years the disbursements will catch up with 
and exceed the revenues, consisting of a state contribution 
which is almost stationary and amounts to only about $65,000, 
and of a teachers' contribution which amounted to about 
$82,700 in 191 7 (outside of $16,000 paid in arrears) and 
which will not increase as rapidly as the pension roll. The 
fund will then draw upon the reserve which it has accumu- 
lated during the earlier years and will expend it in a com- 
paratively much shorter space of time. It will then be unable 
to pay the same rate of benefits and to grant new retirements. 
Only a reorganization of the system on an adequate basis 
can save it from disaster. The system is being investigated 
by the actuary of the Wisconsin State Insurance Commis- 
sion and its weakness will undoubtedly be realized. 

California Teachers' Retirement Salary Fund. The law 

establishing this fund became efifective in August, 19 13, at 

about the same time as the law establishing the state board of 

education. The fund was put into operation on January i, 

19 1 4, after the state board had been organized. Membership 

was made compulsory for all new entrants, teachers already 

in the service being given until the beginning of 19 14 to 

exercise this option. 

A pension of $500 is provided after 30 years of service, 15 

of which must have been passed in the state. The teachers 

contribute at the rate of $1 per month and total contributions 

at date of retirement must equal at least $360. The state 

contributes 5 per cent of the inheritance and transfer tax.^ 

^The proceeds from the inheritance tax were as follows : In 1913, 
$79,344; 1914, $89,775; 1915, $139,154; 1916, $157,261. The total annual 
receipts of the fund from all sources amounted to $346,749 in 1916. Of 
this about one-half came from teachers' contributions and the other half 
from the inheritance tax and from interest on investments. The disburse- 
ments that year amounted to $140,304, the surplus, $206,445, and the capital, 
$683,236. 



Teachers' Pension Systems in the United States 

A statement of the retirement board says that "up to the 
present time the income from the inheritance tax has been 
very satisfactory, but owing to its uncertain character may 
prove disappointing at any time, and the administrators of 
the law do not figure returns from this source as adequate 
for the prospective demands on the law." Experience has 
shown that the use of miscellaneous and fluctuating revenues 
has a bad effect upon a pension fund. In all probability the 
combined income from the two sources will soon prove utterly 
inadequate. The state, according to the law, may in its dis- 
cretion appropriate an additional sum, but it is in no way 
obligated to do so. The wisest policy no doubt would be to 
reorganize. 

That this is appreciated by the managers of the fund may 
be seen from the following extract from the report of the 
finance committee of the board.^ 

The present annual addition to the teaching force of the 
state is about i,ooo, and the average annual increase in revenue 
from this source, therefore, will not exceed $10,000 (the aver- 
age contribution being $10 per year). 

On the other hand we are placing on the retirement roll 
over 130 teachers annually. In the last fiscal year the in- 
creased expenditure on this account over the year previous 
was $54,619.62. To offset this annual increase we can only 
anticipate an increased revenue from teachers' payments of 
$10,000. This conclusively disproves the impression, which 
somehow has gained circulation among teachers, that their 
contributions alone are providing enough funds to support 
the retirement salary demands. As a matter of fact, if the 
present rate of retirements persists, we will, in four years, he 
disbursing our entire income from all sources, and it will be 
necessary thereafter to draw upon our surplus. It is esti- 
mated by the State Board of Control that by the seventy- 
sixth fiscal year we will be facing a serious deficit, unless some 
changes are made in the conditions under which salaries are 
now granted, or revenues provided. 

A study of the histories of teachers now under retirement 

^Biennial Report, State Bd. Ed., 1914-16, p. 76, 
196 



Systems With Inadequate Reserves: State 

salary shows an average age at retirement of 60 (plus) years. 
Mortality statistics give 12 years as the life expectancy at 60 
years of age. For each teacher who takes advantage of the 
law at present the state assumes a liability of $500 per year 
for 12 years, or $6,000. Towards this sum the retiring teacher 
during her 30 years of service contributes $360. It is fre- 
quently asserted that this discrepancy is in a large measure 
made good by payments of teachers who leave the service 
without qualifying for the retirement salary, thereby forfeit- 
ing to the state the money they have paid in under the law. An 
average teacher stays in the profession about three years, and 
therefore during her teaching period contributes about $30 
to the retirement fund. It would take contributions from 118 
of these short term teachers to make up the sum necessary to 
pay for one teacher who remains to retire on full salary. 
Obviously, therefore, lapsed teachers' payments will have little 
effect on the larger problem of retirement salary support. 

In bringing these matters to public attention it is not the 
object of the committee to sound any unnecessary alarm, but 
only to make clear the fact that sooner or later steps will have 
to be taken looking to a more sound financial basis for the 
public school teachers' retirement salary fund law than exists 
at present. The law is in the same category with an ore pocket 
in a gold mine; it is rich enough on the surface, but is certain 
to run out in the future. It is only proper that we should begin 
to take some stock for the morrow. 

Recognizing the great benefit to California schools and 
school teachers of the operation of the public school teachers' 
retirement salary fund law, the necessity for an absolutely 
sound financial basis becomes a matter of vital consideration 
in the administration of the law. If this splendid progressive 
educational institution is to be perpetuated, it must be safe- 
guarded while its administration rests in the hands of those 
committed to and heartily in sympathy with the principles 
upon which the law is based. It is not safe to let the future 
financial obligations of the law depend either in whole or in 
part upon the generosity of biennial direct legislative appro- 
priations. Neither is it right or just to contemplate for the 
state a future financial burden out of proportion to the benefits 
anticipated from the operation of the law. 

The public school teachers' retirement salary fund law 
197 



Teachers' Pension Systems in the United States 

is based upon the theory that the schools and children of the 
state will be benefited by the retirement of teachers who have 
passed the age of real efficiency, by providing for them a 
salary in return for their discontinuance of active teaching. 
But combined with this utilitarian aim is a deep sympathy for 
the men and women of California who have given the best 
period of their lives to the instruction of the young, and a 
desire to see their declining years made comfortable and care- 
free by a stipend sufficient to meet the common necessities 
of existence. Thus we find combined here in this law a mutual 
benefit which is an ideal combination of utility and personal 
reward. For the benefit to the schools, the state should be 
willing to provide generously a lasting financial stability — 
for the personal benefits to accrue to the aged teachers of the 
state, the teaching fraternity should be willing to contribute 
a just portion and to agree to such modifications and limita- 
tions as will be necessary to place the administration of the 
law upon a firm and lasting foundation, so that nothing will 
be liable to arise in future years to curtail or to jeopardize the 
rewards and benefits which teachers spending their life in the 
profession have a right to anticipate. 

The board proposes several things "which can be done to 
make the law less burdensome in its financial administration 
without working any appreciable hardship;" (i) fix the age 
limit of retirement, except under disability, at 55 or 60 years; 
(2) increase the years of service in California from 15 to 20 
years; (3) increase teachers' payments after 15 years of service 
from $1 per month to $2 per month; (4) permit no retirement 
for disability under 20 or 25 years of service, 20 of which 
has been in California. The board realizes that these measures 
are only palliatives. Before an adequate financial reorganiza- 
tion of the system can be effected, the exact financial condition 
of the fund must be determined by means of an actuarial valu- 
ation of the total assets which the fund will realize on account 
of its present members and the total liabilities towards all 
prospective pensioners among them. 

Virginia Retired Teachers' Fund. The difficulties with 

which this fund has had to contend present a striking illustra- 

198 



Systems With Inadequate Reserves: State 

tion of the results of pension legislation enacted without ob- 
servance of actuarial principles. 

The law of 1908/ which established the fund, provided 
it with a revenue consisting of contributions by the teachers 
amounting to i per cent of their salaries and of a small con- 
tribution by the state amounting to about $5,000 annually, 
and fixed the benefits as follows : A pension of one-half salary, 
with a maximum of $400 and $500, after 30 years of service 
in the state, and after age 58, if a man, and 50, if a woman; 
and a proportionately reduced pension at disability. 

The law is retroactive in its application, for it provides 
half -pensions for those teachers who had retired between 
the years 1902-1908 prior to the enactment of the law. This 
is a very unusual provision.^ It has been held unconstitutional 
in several states.' However small the total of these half- 
pensions, it represents an additional and immediate drain on 
these revenues, and the framers of the bill should have known 
that it would precipitate a disaster. 

The state superintendent of schools makes the following 
comment about the system : 

The teachers pension fund in Virginia came as a result of 
the movement started by a very earnest body of teachers. 
The law had been prepared and presented to the legislature 
before our department was consulted about it. We suggested, 
however, that the only hope of avoiding a ruling against the 
constitutionality of the original act was to make the deduc- 
tion of I per cent a matter of contract with the teachers. Our 
suggestion was adopted. 

Our pension law illustrates also the dangers inherent in a 
good deal of modern school legislation which is designed and 
put through by enthusiastic, well-meaning teachers or laymen 

^Virginia, Acts, 1908, ch. 313, March 14. 

''Maine, in 1913, followed the example of Virginia and provided for 
the grant of half-pensions to teachers who had retired before the enact- 
ment of the law. 

^In the state of New York the court has ruled that the board has no 
power to grant a pension to a teacher who ceased to teach before the 
enactment of the law. Mahon vs. Board of Educ, 171 N. Y., 263 (1902) ; 
People ex rel. Wooddy vs. Partridge, 172 N. Y., 305. 

199 



Teachers' Pension Systems in the United States 

without consulting those who have practical and expert know- 
ledge in reference to school administration and the proper 
financing of new school enterprises. The teachers strenuously- 
opposed the retroactive feature, but the members of the legis- 
lature insisted upon that. 

While Illinois, New Jersey, Wisconsin, Michigan and many- 
other systems require that the total of all contributions of a 
teacher eligible to retirement should equal at least the amount 
of the first year's pension, Virginia requires a minimum of 
only 30 per cent. If the provisions in the several states men- 
tioned are insufficient to make a fund solvent, how can Vir- 
ginia hope to escape? 

In view of the provisions thus calculated to supply the fund 
with small revenues and to charge it with large expenditures, 
the law provided that in the event of insufficiency of fund 
the board might prorate the benefits. This of course hap- 
pened at an early date. Two years after the plan was started 
the pension roll reached $41,000, exceeding the revenues, 
which amounted to only $38,500. Then the board of retire- 
ment prorated the benefits.^ No other system either in this 
country or abroad has failed so soon after its establishment. 
The state superintendent says : 

Our legislation for teachers' pensions has been further 
handicapped by reason of the fact that the teachers are divided 
on the primary question of such legislation; namely, whether 
there should be a pension system. Therefore, the member of 
the legislature hears from some of his constituents the expres- 
sion — 'Maintain it by all means,' and from others — 'Abolish 
it immediately.' This divided sentiment which prevails 
among our teachers is the real reason why the appropriations 
have not been more generous. 

Michigan Teachers' Retirement Fund. The conditions 
under which this fund originated were unusual. The bill 
originally provided that in addition to the contributions which 

^Report of the Carnegie Foundation, 1912, p. 26. In 1916 there were 
419 pensions on the roll. The receipts of the fund consisted of $10,000 
from the state, $41,000 from teachers and $2,000 from investments. 

200 



Systems With Inadequate Reserves: State 

the teachers were to pay, the state was to contribute $6,000 
for administrative expense and was also to cover any de- 
ficiency that might arise. The legislature, however, struck 
out the latter two provisions, and on May 11, 1915^ passed 
the bill providing for a revenue from teachers' contributions 
only. 

The teachers" contributions were fixed by the law at one- 
half of I per cent of salary (max. $5) during the first 5 years, 
I per cent (max. $10) during the next ten years and 2 per cent 
(max. $20) thereafter; and the total of all contributions 
must equal at least the amount of the first year's pension. 

These contributions will be insufficient to provide the bene- 
fits which are as follows: After 25 years of service (15 in the 
state) or at disability after 15 years, a pension of one-sixtieth 
of salary for each year of service (min. $300, max. $500) and 
at resignation a refund of one-half of the member's contribu- 
tions without interest. 

In the event of insufficiency of the fund the board may 
increase the contributions to i, 2, and 3 per cent respectively. 
Even a contribution so graded would equal an average con- 
tribution of less than 2 per cent of salary throughout the 
twenty-five years of contributing, since the higher contribu- 
tion of 3 per cent would accumulate interest during a short 
period only. 

The experience of almost all pension funds of long opera- 
tion tends to show that no fund can be secure with benefits 
as generous as this fund allows unless it has a revenue several 
times as great. It is evident, therefore, that the increase of 
contributions within the narrow limits allowed by the Michi- 
gan law will be insufficient to save the fund from depletion. 
The board of retirement may then have to prorate pensions 
and even to stop granting new pensions altogether unless 
state aid is invoked and the system is reorganized. The first 
of these measures is specified by the law, the second measure 

'Michigan, Acts, 1915, ch. 174. 

201 



Teachers' Pension Systems in the United States 

is made possible by the provision which leaves the matter of 
granting or refusing of pensions entirely in the discretion of 
the board. 

The following statement made by one of the officers of the 
fund in April, 19 18, shows that steps looking to an actuarial 
reorganization of the fund are already being taken: 

A few changes will be made during the next year. I believe 
that the Retirement Fund Board agrees with me in believing 
that certain changes as to bettering its finances will be advis- 
able at the first opportunity. 

The Retirement Fund Board has already placed an age 
limit of fifty-five among the requirements for retirement. 
This may be raised to sixty at the next meeting of the Board. 
I believe there will be an effort made in this state in the near 
future to have the state assume the cost of the administra- 
tion of the law and also to provide state aid in the support 
of the law. 

In my opinion a sound and equitable retirement system must 
have an age limit in addition to a service requirement. 1 
believe that there should be three sources of income : 

1. Teachers contributions. 

2. Contribution of a like amount by the local School 

Board. 

3. Contribution directly from the state. 

I believe that our fund should be placed on a sound actuarial 
basis at the earliest possible date. 

During the present school year we have collected data which 
gives us the salary and experience distribution for the teachers 
of the state and during the following school year we shall 
procure data which will give us the age distribution of the 
teachers of the state. We then hope to be in shape to make 
such investigations of our fund as will place the exact facts 
in the matter before us. 



202 



CHAPTER XIII 

SYSTEMS WITH INADEQUATE RESERVES: 
LOCAL SYSTEMS 

Philadelphia Teachers' Retirement Fund. The income of 
this fund is derived from two sources : the teachers and the 
city. The teachers contribute i per cent from their salaries 
the first lo years and 2 per cent thereafter (max. $50). The 
city contributes an amount equal to that contributed by the 
teachers during the preceding year, provided its financial con- 
ditions warrant. In no case may it contribute less than 
$50,000. The total contribution of a teacher eligible to retire- 
ment must equal at least the amount of twenty-five contri- 
butions. If it falls short of that amount, the difference must 
either be paid by the teacher or it is deducted from the pension. 

A pension of one-half salary, minimum $400 and maximum 
$1,000, is provided for a teacher who retires after 60 years 
of age and 30 years of service. Proportionate pensions are 
paid at disability and a refund of the members' contributions 
is provided at dismissal. 

The fund was established in 1907. During the ten years 
ending December 31, 19 16, the fund accumulated a balance 
of about $820,000, of which over $385,000 was accumulated 
during the first four years. Although the income from 
interest increased during these ten years from about $1,600 
to $36,700, and the city subsidy which amounted to only 
$50,000 the first six years was increased the seventh year to 
$60,000, next year to $70,000 and for the last two years 
amounted to $80,000, and the income from arrears has in- 
creased to about $20,000 annually, the process of accumula- 

203 



Teachers' Pension Systems in the United States 

tion has been gradually slowing down. In 1907, $107,000 
and in 1908 more than $101,000 were set aside from the 
income and invested, whereas during the last two years only 
about $72,000 annually had been added to the invested capital 
of the fund. 

The main cause of this decrease in the rate of accumulating 
a reserve was the rapid growing of disbursements on account 
of annual additions of new pensions. During 1907 fifty pen- 
sions were granted and two were terminated during the same 
year on account of death. During the next seven years as 
many as 340 pensions were added to the original number 
and only fifty-two were terminated on account of deaths and 
fourteen from other causes. The number of pensions, there- 
fore, increased from 48 in 1907 to 371 in 1916. 

As a result of this increase the disbursements each year 
required a greater proportion of the annual income as shown 
in the following chart : 





Percentage oi 
Expended on 


E Income 


Percentage of 


Year 


Pensions 


Income set Aside 


1907 


8.5 




91.5 


1909 


35^5 






I9H 


51.6 




48.4 


I913 


58.7 




41.3 


I9IS 


63.6 




36.4 


I916 


69.4 




30.6 



The disbursements will continue to increase more rapidly 
than the receipts, because the number of new retirements 
added each year to those already granted will not be counter- 
balanced by terminations. It takes a retirement fund about 
sixty years to strike this balance. The Philadelphia fund in 
its present form, however, cannot survive sixty years, for its 
income is inadequate and the fund will soon be depleted. 

It will take but a few years for the growing disbursements 
to catch up with and exceed the income. After the fund 
has reached the crisis, it will rapidly expend the reserve 
accumulated during earlier years and will be unable to pay 
full benefits and grant new retirements. This danger was 
realized by the retirement board as evidenced by a recent 

204 



Systems With Inadequate Reserves: Local 

report in which the board says that while the fund will be 
able to meet its future liabilities for some years to come, its 
more remote future is not reassuring. "The Retirement 
Board has undertaken an appraisement of the fund, employ- 
ing for the purpose competent actuarial service." The 
thought that guided the board in taking this action is stated in 
the following words :^ 

In reports for preceding years the apparently rapid accumu- 
lation of the reserve fund has been cited as seeming to indicate 
the stability of the fund, and, while attention was directed 
to the consideration that 'a score or more years must elapse 
before what will constitute normal demands upon the fund 
may be very definitely ascertained,' the opinion was ventured 
that it would be able to meet its future obligations. There 
is no question but that it can do so for some years to come. 
Recent developments, however, in connection with other sys- 
tems analogous to our own and whose experience, therefore, 
furnishes us with some indication of the probable course that 
funds so constituted must take as the years go on are not 
reassuring for the more remote future. 

The financial and other weaknesses which have developed 
in a number of state and city funds and in some systems 
under other than public auspices have greatly stimulated study 
of the whole question and it has been discovered that a large 
number of the existing pension systems of the country are not 
upon a basis recognized as sound when assets and liabilities 
are computed in accordance with accepted actuarial principles ; 
and, apart from the question of solvency, that many systems 
are not organized so as to promote most effectively the ends 
for which they are designed. 

The findings of this report and the results of other studies 
that are now available clearly indicate that the question of the 
solvency of any fund should not be permitted to rest upon 
estimates which the future may prove to be wide of the mark, 
but should be ascertained by exact actuarial appraisement of 
its assets and liabilities. It is a satisfying assurance when 
such an appraisement results in the verdict that a fund is 
solvent and that its present and anticipated resources are such 
that it may be expected also to continue so. It is, of course, 

^Annual Report of the Philadelphia Retirement Board, 1916, p. 22, 23. 
205 



Teachers' Pension Systems in the United States 

far from satisfactory, but even more important that the fact 
be ascertained, if the verdict be that the fund is heading 
toward disaster. There are possibiHties of distress attendant 
upon the collapse of a retirement fund that one cannot con- 
template with equanimity, and for this and other reasons a 
system found to possess elements of weakness should be 
revised in whatever direction and to whatever extent may be 
necessary in order to place it upon an unquestionably sound 
basis. 

Asked as to the changes in the system, which he would 
believe advisable, one of the officers of the fund said : 

In accordance with the probable findings of the actuarial 
report, it will be necessary either to scale down the benefits, 
increase the contributions or make revisions of the system in 
both directions in order to place it upon a sound financial basis. 

A revision of the system in my judgment should include the 
following : 

(a) Elimination of the 'service' provision of superannua- 
tion retirement, i. e., have the superannuation retirement 
determined by age only, the years of service factoring merely 
as determining the amount of the retiring allowance. 

(b) Possibly an advance of the superannuation age beyond 
the present requirement, age 60. 

(c) Provision for a minimum disability benefit. 

(d) The establishment of a greater difference between the 
disability benefits and the superannuation benefit than is now 
provided in the system. 

(e) Provision for a refund benefit. Under the present 
regulations the contributions of those who separate from the 
service (except in the case of those dismissed for cause) are 
forfeited. There has been little objection raised to this partly 
because the rate of contribution is not large. If the system 
were on a sound financial basis rates of contribution would 
be much larger and the amount forfeited would therefore be 
more considerable. 

(f) More definite provision as to the amount of contribu- 
tion to be made by the Board of Education. 

(g) The system should be established on a reserve basis 
instead of on the present cash disbursement basis. 

In November, 19 18, a report was submitted to the retirement 

206 



Systems With Inadequate Reserves : Local 

board by the actuary, which showed that the fund had a de- 
ficiency of approximately $9,000,000 (Habilities of $13,000,000 
against assets of $4,000,000) and "will ultimately not be able 
to pay more than 31 cents to annuitants for every dollar ex- 
pected." The report showed that it would be to the best ad- 
vantage of the teachers and of the city if they merged their 
fund with the newly created state fund. 

Cleveland Teachers' Pension Fund. Cleveland is one of 
the twenty cities in Ohio which has availed itself of the state 
law, 1896-1911, which enabled any city to establish a pen- 
sion fund provided one-third of its teachers approved it. 
When in 1906 the proposal was made in Cleveland to estab- 
lish a pension fund, 797 teachers voted for and 713 against. 
Since the number of votes in favor of the creation of the fund 
was more than what the law required, the system became 
operative in spite of the large opposition. The teachers 
already in the service at the time of establishment of the fund 
were given an option to join or not to join. For all new 
entrants into the teaching force membership was made com- 
pulsory. 

The board of trustees is composed of six members ; two 
members elected by the board of education and four elected 
by the members of the fund.^ Support is derived from two 
sources — the teachers and the city. The teachers contribute 
$2 per month, and must pay a total of $20 for each year of 
service for which they claim credit, up to the amount of $600. 
In case a retiring teacher has not paid this amount, his pension 
is reduced 20 per cent until the required amount has been 
contributed. The city pays into the fund not less than i per 
cent or more than 2 per cent of the gross receipts of taxation 
raised for school purposes. 

A teacher may retire after 30 years of service, one-half of 
which period must have been served in the schools of Cuya- 
hoga County, and is entitled to a pension of $12.50 multiplied 

^Cleveland Teachers' Pension Fund, Rules and Regulations, 1914. 16 p. 
207 



Teachers* Pension Systems in the United States 

by the number of years of service, up to a maximum of $450. 
In case a teacher is disabled after 20 years of service, one-half 
of that time having been served in Cuyahoga County, he is 
entitled to a pension at the above stated rate. In the event of 
resignation or dismissal, the teacher or his dependents are 
entitled to a refund of one-half of his contributions without 
interest. In the event of dismissal before 20 years of serv- 
ice, the teacher is entitled to a return of all his contributions. 
In the event of dismissal after 20 years of service, the teacher 
is entitled to a pension for the given years of service. 

The financial effect of the provision allowing credit for 
outside services is discussed in W. A. Jessup's report on "The 
Teaching Staff of Cleveland," which is a part of the education 
survey conducted by the Cleveland Foundation in 191 5. Mr. 
Jessup writes: 

There is another reason why the school system should exer- 
cise great care in bringing into the force teachers who are no 
longer young. This is the serious effect which the employ- 
ment of such teachers will have on the future of the pension 
fund. Figures for 10 recent appointments of teachers from 
outside of Cleveland show that their average is 43 and that 
they have had an average teaching experience of 16 years. 
With respect to the future of the pension fund, there is a 
great difference between the employment of such a teacher 
and bringing into the force a teacher who has recently gradu- 
ated from a normal school and had a year or two of teaching 
experience. 

Some idea of the quantities involved may be gained from 
a study of the actuarial tables presented in the report of the 
Teachers' Retirement Fund of New York City published in 
191 5. A comparison of age and experience figures for the 
teaching forces of Cleveland and New York, shows that the 
lower quartile for the distribution showing the ages of the 
Cleveland teachers exactly corresponds with the similar figures 
for those of the teaching forces of New York City. Similarly 
the corresponding figures of the distribution showing the 
teaching experience of the teachers here correspond with those 
showing the teaching experience in New York City. Hence 
we may feel fairly safe in using the New York actuarial 

208 



Systems With Inadequate Reserves : Local 



tables in making a prediction concerning the teaching force 
in this city. On this basis we may study the probabilities con- 
cerning the teachers who enter the Cleveland force at about 
the age of 21 as compared with those of teachers brought in 
at about the age of 43. 

Such a comparison shows that only about one-third of the 
teachers entering at the younger age will remain in the teach- 
ing profession long enough to qualify for a pension. On the 
other hand, eight out of nine of those who come in at the age 
of 43 will complete their term of service and will be eligible 
for pension benefits. Taking into account the payments to 
the fund made by all of the teachers entering at the different 
ages, the refunds made to those who resign, the proportion 
of survivors who become eligible for pensions, and the expect- 
ancy of life after beginning to participate in the pension bene- 
fits, a careful computation shows that the sum involved by the 
pension fund for teachers employed at the age of 21 amounts 
to about $130 for each year of teaching service actually 
rendered, while the corresponding risk for teachers employed 
at the age of 43 amounts to about $330 for each year of 
teaching service actually rendered. 

The board may prorate the pensions if the fund proves in- 
sufficient. In 1 91 6 the fund had a membership of about 1,800, 
a capital of about $400,000 and a pension roll of about 100 
beneficiaries.^ 

The statistical data for the years 1911-1917 are shown 
below 



ITCIVW 








Annual Surplus 












(Excess of 












Income 




Teachers' 




Interest on 


Pension 


Over 


Year 


Contributions 


Taxes 


Investments 


Disbursements 


Disburse- 
ments) 


191 1 


$16,150 


$34,716 


$6,439 


$l8,Q00 


$36,020 


1912 


24,186 


34,606 


8,571 


22,945 


46,630 


I913 


30,466 


35,565 


11.450 


26,499 


49,567 


I914 


33,212 


38,526 


13,521 


29,755 


58,367 


1915 


35,225 


42,139 


17,455 


35,356 


58,913 


1916 


37,444 


43.915 


20,201 


39.901 


58,253 


1917 


43.025 


47,460 


23,840 


49,478 


61,133 



Boston Teachers' Retirement Fund. At the establishment 
of the fund in 1900- only a very inadequate attempt was 

'With the enactment in May, 1919, of a sound state retirement system 
in Ohio (which is discussed in Chapter XVIII) an opportunity is given 
to the Cleveland and other local pension funds of Ohio to merge with 
the state system at any time. 

^Massachusetts, Acts, 1900, ch. 237, April 7. 

209 



Teachers' Pension Systems in the United States 

made to ascertain whether or not the income with which the 
fund was provided would accumulate sufficient assets to meet 
its liabilities. 

The fund was provided with a revenue consisting of teach- 
ers' contributions of $i8 per year and of payments by annui- 
tants whose total contributions amounted to less than $540. 
Upon retirement after 30 years of service or at disability, 
an annuity was granted, if applied for, the amount of which 
was to be determined by the board of trustees each year, 
in accordance with the financial condition of the fund. At 
resignation of a member, one-half of his contribution was 
refunded, if applied for within three months. 

Membership in the fund was made compulsory for all new 
entrants into the service and optional for those already in the 
service. Of the latter 1,256 have elected to become members. 

The fund was divided into two parts : a "permanent fund" 
which consisted of the members' contributions, "gifts, legacies 
and sums set apart by the board of trustees; and a "general 
fund" which was formed of the contributions of the members, 
the interest from the "permanent fund," the moneys left by 
deaths and resignation of members, and the payments by the 
annuitants to complete $540. 

The board of trustees and its committee on finance were of 
the opinion that by dividing the income between the two 
funds they would always be able to determine "between what 
limits the fund may be safely and justly used in the payment 
of annuities." "By this system," the report of the finance 
committee of 1902 said, "it will be seen that the fund is always 
solvent." The actual experience of the fund, however, proved 
later on that through error of judgment as to the rate of 
annuity which could be allowed the fund failed to be solvent. 

The method adopted by the board of determining what 
annuity the fund could afford to pay was rather crude. 
In 1901 the board of trustees decided that "the fund would 
210 



Systems With Inadequate Reserves : Local 

allow" $150. In the year 1903 the board of trustees decided 
on $168. In 1904 it decided that the condition of the fund 
warranted the payment of $180. Since that year and up to 
19 1 4, $180 was the annuity paid. 

During the fourteen years from 1900 to 19 14 the number 
of annuities increased from 7 to 249, and the annuity roll 
increased during the same period from $329 to over $45,000. 
The membership of the fund exceeded 2,600 and its balance 
at the end of that period amounted to about $392,000. 

In the year 19 14 three members of the Massachusetts Com- 
mission on Pensions, which was appointed "to report fully 
and in detail the various systems under which pensions are 
now paid" in Massachusetts, made an investigation of the 
fund. Mr. H. D. Brown, the actuary of the commission, 
reported that his estimate of the assets and liabilities of the 
fund showed a deficit in the fund of $1,312,687 and that the 
fund would not be able to meet its future liabilities on the 
basis of a $180 annuity. 

The board of trustees immediately engaged Mr. W. J. 
Montgomery, the state actuary, to investigate and report what 
amount of annuity the fund could afford to pay. He reported 
on September 14, 19 14, that the condition of the fund was 
such that an annuity of only $81 could be paid existing and 
prospective pensioners in return for the annual contributions 
of $18 without incurring a deficiency, and that if the payment 
of $180 were continued to the members already retired, then 
only $61 could be paid to the members who might be retired 
after 1914.^ 

Finding that the uniform contribution of $18 per year, 
regardless of age, was inadequate and unsound and could 
not safely guarante even a reduced annuity of $81, the actuary 
recommended that legislation should be secured by which the 
contributions might be increased and graded according to age 
and that a gradual reduction of annuities, say $25 or $30 each 

^Report of the State Actuary to the Board of Trustees, 1914. 14 p. 
211 



Teachers' Pension Systems in the United States 

year, should be adopted until such time as the fund shall be 
on an adequate basis. 

Upon the receipt of this report the board of trustees decided 
to reduce the annuities to $132 and a year later it further 
reduced the annuities to $120. 

The annual report of the board for the year 191 7 contains 
the following passage : 

At the December meeting of the Board at which the rate 
of annuity for the ensuing year is annually established, the 
question what annuity our Fund will allow to be paid to our 
annuitants, year by year without affecting its solvency, which 
has, of late greatly interested our Board of Trustees as well 
as our annuitants and our contributing members, came up 
for consideration, some members of our Board believing that 
even our reduced annuity of one hundred twenty dollars was 
too large and that the annuity should be still further reduced. 
After some discussion it was finally voted to make no change, 
and for the year 191 7 to continue the annuity rate at one 
hundred twenty dollars a year' the same as in 19 16. The rate 
of annuity for the year 1918 will be fixed at the regular 
monthly meeting of the Trustees next December. 

Boston Teachers' Permanent Fund. An act of 1908^ 
provided for the creation of this fund from city revenues, 
and the inclusion in it of the members of the contributory 
retirement fund just described, which had been established in 
1900. Taken together, the annuity of $180 from one fund 
and the pension of one-third salary from the other, the com- 
bined benefit amounted to half salary. The pension could be 
granted only after 65 years of age and 10 years of service or 
at disability. 

The fund was provided with an income consisting of a city 
contribution of five cents for each $1,000 of assessed valuation 
of taxable property. This income which had but a slow rate 
of increase, as compared with the rapidly increasing pension 
expenditure, could not remain long adequate. It took the 

^The capital of the fund at that time amounted to about $486,000. 
2Massachusetts, Acts, 1908, ch. 589, June 3. 





Receipts by 


Expenditure 


Year 


Tax Valuation 


on Pensions 


1908 


$63,891 


$1,678 


1909 


65,043 


8,075 


I9IO 


66,194 


26,247 


I91I 


67,770 


55,350 


1912 


70,192 


64,510 


I913 


72,012 


72,889 



Systems With Inadequate Reserves : Local 

fund only six years to develop an excess of expenditure over 
income as shown in the following table/ 

Surplus Deficit 

$62,213 

56,968 

39,946 

12,420 

5,681 

$876 

In order to cover the deficiency, the fund was forced to 
draw upon its balance which amounted in 191 3 to about 
$189,000, and which would have been expended during the 
next four or five years had the fund continued to operate with 
the same income. 

At that critical stage in the development of the fund, the 
estimate of the condition of the fund by the Massachusetts 
Commission on Pensions was made. The report of Mr. H. 
D. Brown, the actuary of the commission, showed that the 
fund had a deficiency of $3,700,000, which would have to be 
provided for if the fund was to operate on a reserve basis. 

The actuary also estimated what the ultimate cost to the 
city would be if the fund should operate on a cash disburse- 
ment basis, appropriating the necessary amount directly each 
year as it came due. He found that for the same number of 
members and same size of payroll, the annual cost to the city 
in pensions, which in 191 3 equaled only about 2 per cent of 
the amount expended that year in salaries, would increase for 
the next sixty years, reaching as much as 12 per cent of the 
amount expended in salaries. Not before sixty years would 
the fund reach the normal level at which new pensions would 
be counterbalanced by terminations on account of death. The 
cost to the city would then normally remain at the high level 
of 12 per cent. 

The only immediate effect of the report was that a law 
was passed in 191 5 increasing the income of the fund from 
five to seven cents per $1,000 valuation. The fundamental 

'Massachusetts, House Docs., 1914, No. 2450, p. 49. 
213 



Teachers' Pension Systems in the United States 

question whether the fund should be operated on a reserve or 
cash disbursement basis was left undecided. 

The increase of the fund's income could give the fund only- 
temporary relief. The increase amounted to about $30,000 
and raised the 191 5 income to about $105,000. Out of this 
amount, however, as much as $90,000 had to be expended on 
pensions during that year, leaving an unexpended balance of 
only about $15,000.^ 

In the year 19 17 an act was passed by which the fund 
became subject to the reimbursement provisions of the law 
of 191 3. The state reimburses the city with practically the 
entire amount of newly granted pensions, as may be seen from 
the following statement: 

Amount of 

Year Ending Pensions Paid Reimbursement Balance Paid 

July I by the City by State by City 

1915 $8,782.55 $8,637.68 $144-87 

1916 16,132.59 15,684.28 448.31 

It would, therefore, appear that in the course of time as 
the old pensioners, retired before July i, 1914, die, and are 
dropped from the pension roll, the city will receive from the 
state in reinbursements practically the entire amount it will 
pay for pensions, and the state will bear practically the entire 
burden, which, as already shown, will increase from year to 
year, because no reserve is provided against the future pay- 
ments. 

Baltimore Teachers' Retirement Fund. This fund is 
managed by a board of trustees which consists of the city 
comptroller, the superintendent of instruction, two members 
of the board of school commissioners, and three members 
elected by the teaching force. The fund derives its support 
from a contribution by the teachers and from a discretionary 
appropriation by the city. The teachers contribute i per cent 
of their salary (max. $14.40) during the first 10 years of 
their service, ijE/^ per cent (max. $21.50) the next 10 years 

^Annual Report of the Fund, 191 5. In the Minutes of Evidence of the 
Boston School Committee, 1916, Feb. 21, p. 19. 

214 



Systems With Inadequate Reserves : Local 

and 2 per cent (max. $28.80) thereafter. They must con- 
tribute in total an amount equal to one year's pension before 
they can retire, otherwise their pension is reduced. 

After 40 years of service, 20 of which must have been 
served in Baltimore, a teacher is entitled to retirement (pro- 
vided the approval of the board of trustees of the retirement 
fund is secured) on a pension of one-half of the average 
salary of the last 5 years, minimum $260 and maximum $600. 
Proportional pensions are paid at disability after 20 years and 
a refund of one-half of the member's contributions is made 
at resignation, dismissal or death after any length of service. 

In the year 1909,^ when the fund was established, no retire- 
ments were made and no expenditures were incurred. That 
year's receipts, amounting to about $14,000, remained in the 
fund. The first pension expenditure made in 19 10 amounted 
to only $7,670 which was considerably less than the amount 
of the teachers' contributions. The excess of the latter over 
the expenditure was increased by the city's $3,000 appropria- 
tion. During the third year, however, the pension expendi- 
ture more than doubled, thereby exceeding the amount of 
the teachers' contributions. The total receipts, including these 
contributions, interest on bank balances and the city's $3,000 
appropriation, resulted in only a very slight additional balance. 
During the fourth and fifth years the rapidly increasing dis- 
bursements forced the city to increase its appropriation from 
$3,000 to $8,200 and $9,100 respectively. Since the receipts 
from members' contributions increase much slower than the 
disbursements of the fund, as shown in the following table, 
it is evident that the city will be called upon to grant the fund 
higher and higher appropriations each year. 





Contributions 




City 




Year 


of Teachers 


Interest 


Appropriations 


Pension Roll 


1909 


$11,227 


$56 


$2,780 


No 


I9IO 


16,684 


781 


3-000 


7,670 


I9H 


16,913 


940 


3.000 


18,418 


1912 


17.844 


1,082 


8,200 


23,046 


1913 


19,022 


1,307 


9,100 


26,330 



^Maryland, Acts, 1908, ch. 78, March 12. 
215 



Teachers' Pension Systems in the United States 

The investment of the fund amounted in 19 13 to about 
$33»430- 

Buffalo Teachers' Retirement Fund. Among the teachers' 
retirement funds in this country, that of Buffalo is one 
of the oldest. The law of 1896/ by which this system 
was established, provided that the fund should consist of 
contributions from teachers, the amount of which should not 
exceed i per cent of their salaries. A teacher who served 
40 years, if a man, and 35 years, if a woman, was entitled to 
retirement on a pension not exceeding one-half his final salary. 
The retirement board consisted of the mayor, the superin- 
tendent of education, the chairman of the board of school 
examiners, the president of the Principals Association and the 
president of the Women Teachers Association. 

After about ten years of operation, during which the fund 
accumulated a balance of about $72,000, the disbursements of 
the fund exceeded its receipts. In view of this excess of 
disbursements over receipts an amendment of the old law 
was secured in the year 1909, which increased the teachers' 
contributions up to 2 per cent of salary and authorized the 
city to contribute an amount equal to that contributed by 
the teachers during the preceding year.* At the same time 
the benefits were made more liberal by reducing the required 
length of service to 35 and 30 years for men and women 
respectively.^ The provision of the law of 1896, allowing the 
board to use not only the income but also the principal of the 
fund, and to reduce the amount of pension if necessary, re- 
mained in force. 

The increase of the teachers' contributions and the addition 
of a new source of revenue in the form of an annual appro- 
priation, which has been fixed by the city at $10,000 since 
1909, have temporarily averted an exhaustion of the fund 

'New York, Acts, 1896, ch. 928. 

2New York, Acts, 1909, ch. 554, May 28. 

'For detailed provisions of the law see table on page 303. 

216 



Systems With Inadequate Reserves: Local 

and have permitted the fund to increase its principal, which in 
191 5 amounted to about $i30,cxx). As the disbursements of 
the fund will continue to increase (they already exceed the 
amount of the teachers' contributions) the city will be com- 
pelled either to increase its appropriation or to draw upon the 
principal of the fund or reduce the amount of pension. By 
doing so, it may prolong the existence of the fund for a 
short time, but ultimately it will have to be reorganized. 

One of the latest developments in the system is the prepara- 
tion of an actuarial estimate of its assets and liabilities. It 
showed that the total liabilities of the fund amounted to about 
$3,800,000, of which about $400,000 represented the liability 
on account of the ninety-eight pensions, which aggregated 
about $40,000 annually. The assets of the system amounted 
to only about $800,000, leaving a deficiency of $3,000,000. 
The actuary reached the following conclusions :^ 

If no change is made in the contribution, it will not be long 
before reductions will have to be made and the beneficiaries 
of these funds must either face a complete readjustment or 
still be in doubt as to the exact amount of their pensions, hav- 
ing only the very unsatisfactory knoweldge that eventually 
the annuity payments will be exceedingly small. 

We would suggest, first, that an opportunity be given to 
the employees to express an opinion as to whether or not they 
desire a continuation of these benefits. It may be that a 
majority would prefer to have the law revoked and then make 
provision for their future as individuals. It might be well 
to admit that the scheme was ill-conceived and all parties 
agree to undo as far as possible what has been done and 
abolish the different funds (teachers', police and firemen's 
funds) by having the city return to the employees the deduc- 
tions made in the past from salaries, while at the same time 
assume the responsibility of continuing the pension for those 
now receiving benefits. 

If an employee were told that the benefits called for in the 
law could not be paid and that consequently he was receiving 

^Report on the Firemen, Police, and Teachers' Pension and Retirement 
Funds, March 3, 191 7. 

217 



Teachers' Pension Systems in the United States 

back his contributions, he would at least feel as though he 
were being treated fairly. Those who are now on pension 
could have no complaint, as their benefits would be continued. 
If it is preferred not to abolish the funds, but to make a 
readjustment, it ought to be on some permanent basis. Each 
member should receive a certificate stating that he is a member 
of this association and that in consideration of such and such 
a payment by him, accompanied by such and such a contri- 
bution from the city, benefits will be granted in accordance 
with the terms thereof. This is similar to the action of an 
insurance company which issues its definite guarantee to its 
policyholders in the form of a contract and which then places 
all its resources behind the contract. 

New Orleans Teachers' Retirement Fund. The system 
of New Orleans has been in operation only since 1910,^ yet it 
has already met with difficulties. Up to 1913 the fund was 
supported only by the teachers. They contributed i per cent 
of their salary the first 10 years of service and 2 per cent 
thereafter. The fund provided benefits of one-half of the 
average salary of last five years (min. $300 and max. $600) 
upon retirement at age of 65 or after 30 years of service, 10 
years of which must have been served in the city, and it paid 
proportional pensions at disability. One-half of the teachers' 
contributions were refundable at death or resignation, and 
the full amount at dismissal. 

After three years of operation the disbursements of the 
fund exceeded by about $4,000 its receipts from teachers' 
contributions and from the interest on the deposits. To 
cover this deficiency the city appropriated $580, a donation 
of $180 was secured and a festival was arranged, the proceeds 
of which amounted to about $1,600. Still a deficiency of 
about $1,500 remained uncovered. The fund had to draw 
upon its capital, thereby reducing it from $18,000 to $16,500. 
Next year (1915) the disbursements, amounting to about 
$18,860, exceeded the regular receipts by about $5,000. This 
deficiency was covered by securing an appropriation of $i,ooa 

^Louisiana, Acts, 1910, ch. 116. 

218 



Systems With Inadequate Reserves: Local 

and by borrowing $5,000 from the board of school directors. 
In 19 1 7 the pension disbursements amounted to approximately 
$23,000 and exceeded the regular revenue from teachers' 
contributions and interest by more than $10,000. The defi- 
ciency was covered by raising $5,000 "from proceeds of edu- 
cational day, farm and live stock show," $4,000 from sale of 
waste paper, $200 from royalties on spelling lists, and $1,900 
from an appropriation by the city. The capital of the fund 
was still further reduced to $11,120. It is evident that the 
fund cannot exist long under these conditions. 

In 19 1 8 a bill was prepared and its passage secured by 
which the Orleans Parish School Board was required to 
appropriate at least as much as the assessment paid by teachers, 
and further, the rate of assessment paid by the teachers, which 
ranged between i and 2 per cent, was changed to 3 per cent. 
One of the officers of the fund says: "By the provisions of 
this law we will receive annually about $60,000, and as we are 
now paying retired annuities of about $24,000, we feel that 
in a short time the fund will be placed on a stable basis." 

Denver Teachers' Retirement Fund. This system, estab- 
lished in 1909,^ is supported by the city by a special levy 
amounting to a maximum of one-tenth mill. The teachers 
do not contribute. Men may be retired on a pension of $360 
at age of 60, and women at the age of 55, provided they have 
served 25 years, 15 of which must have been served in the 
city, or at disability after at least 10 years of service. The 
granting of pensions depends entirely upon the discretion of 
the city, which may at any time discontinue granting new 
retirements. There were sixty teachers on the pension list 
in 191 7. The increase in the disbursements of the fund is 
shown below. ^ 



Year Ending 




Year Ending 




June 30 


Disbursementi 


June 30 


Disbursements 


I9IO 


$180 


1914 


10,080 


I9II 


3,000 


I915 


12,600 


1912 


3,660 


1916 


16,110 


I913 


7,200 


1917 


19,440 



^Colorado, Acts, 1909, ch. 214, May 5. 
^On June 30, 1917, the fund had a cash balance of $27,700. 
219 



CHAPTER XIV 

SYSTEMS WITH INADEQUATE RESERVES: THE 
CHICAGO FUND 

The Chicago Teachers' Retirement Fund presents a history 
so illuminating as to warrant a treatment somewhat fuller 
than that accorded the other systems operating with inadequate 
reserves. This history may be divided into three periods. 
From 1895 to 1907 the fund was wholly contributory, i. e. 
supported by the teachers and not subsidized by the city. Part 
of the teachers supported it but a considerable part opposed 
it vigorously, and under the pressure of their opposition mem- 
bership was made optional. The second period started in 
1907, when the increasing inadequacy of the fund resulted 
in a subsidy by the city. The optional feature was changed 
to a compulsion with certain limitations. The increased con- 
tributions of the city temporarily improved the condition of 
the fund, which, however, continued to operate on an actu- 
arially unsound basis. The third period is now beginning 
with an attempt to reorganize the system on an actuarial basis. 

The Fund Wholly Contributory: 1895-1907. The law 

which established in 1895^ ^ retirement fund for teachers 
and public school employees of Chicago was passed at the 
solicitation of teachers' associations. It provided for the 
establishment of a pension board composed of the board of 
education, the superintendent of schools and two teachers, 
elected by the members of the fund, thereby giving the repre- 
sentatives of the city the majority voice. Membership in the 
fund was made compulsory. The teachers and the public 

^Illinois, Acts, 1895, p. 312. 

220 



Annual 


Annual 


Annual Surplus 


Receipts 


Disbursements 


(Excess of Receipts 
Over Disbursements) 


$38,500 


$4,800 


$33,700 


40,500 


19,400 


21,100 


45,600 


32,700 


12,900 


54,000 


46,300 


7.700 



Systems With Inadequate Reserves : Chicago 

school employees were to contribute to the fund a maximum 
I per cent of their salaries. This revenue was thought suffi- 
cient to provide pensions of half salary, maximum $600 after 
25 years of service. At no time were reliable estimates made 
of the real cost of retirement benefits. The city was not called 
upon to contribute any part of the cost, the law explicitly stat- 
ing that "no taxes shall ever be levied or an appropriation of 
public money be made for said fund. * * *" 

During the first year of the fund, the disbursements 
amounted to only $4,752. They rapidly increased from year 
to year as shown in the following table : 



1896 
1897 
1898 
1899 

The margin between the inadequate revenues and the in- 
creasing disbursements became so narrow after four years of 
operation as to make evident that within a year or two the 
disbursements would exceed the receipts. 

In February, 1900, after the proposal to employ an actuary 
had been defeated, the board of trustees appointed a com- 
mittee of five "to study the question and take it up with the 
teaching force with instructions to investigate and suggest 
what changes can be made to the pension law so that the 
same may be put on a sound basis. "^ A few months later 
the disbursements exceeded the receipts and the question as 
to the need for an actuarial investigation was again raised, 
not in the board of trustees but in the pension convention of 
delegates from the teaching force. The convention resolved 
that the investigation of the committee of delegates showed 
clearly "the insolvent condition of the pension fund and its 
utter inadequacy to meet the obligations that have already 
been assumed, to say nothing of the caring for future pen- 

^Proceedings of the Board, Feb. 7, 1900. 
221 



Teachers' Pension Systems in the United States 

sions; and that "it is a great wrong to the contributors as well 
as those pensioned to continue under the present law," and 
that il is "the duty of the trustees of the fund to properly 
protect the contributors;" and requested the board "to take 
some action to provide funds for employing an actuary to 
amend the pension law." 

The actuary engaged, as a result of this resolution, reported 
in March as follows: 

I find that the contribution of i per cent is insufficient to 
provide such maximum annuity as the law prescribes. I find 
that in no ordinary case would the contribution of i per cent 
during twenty-five years of service be sufficient to provide 
an annuity much, if at all, exceeding $50 per annum. For 
a twenty years' term of contribution this amount would be 
considerably less, in some cases not one-half of the maximum 
amount just suggested. * * * Yet the fund has been 
paying in just such cases pensions ranging between $400 and 
$600.' 

The report showed that even if the present contributors 
were to forfeit all their contributions made theretofore and 
the capital of the fund could be set aside exclusively for the 
pensioners already retired, it would barely cover one-sixth 
of the necessary amount. This would leave contributors not 
yet pensioned to start anew as if they never had contributed 
to the fund, and would provide them with only such very 
small benefits as their future contributions might earn for 
them. 

The actuary pointed to some of the inequitable features of 
the system, stating in part that "the provision requiring equal 
contributions for equal benefits is inequitable between con- 
tributors of different conditions as to age, term of contri- 
bution, term of service, etc. The amount of the annuity or 
the rate of contributions, or both, should be varied with due 
regard to these conditions." He submitted recommendations 
for the amendment of the law and suggested that until the 

^Proceedings of the Board of Trustees, April 3, 1901. 
222 



Systems With Inadequate Reserves: Chicago 

proposed amendments should be adopted all pensions be re- 
duced to a nominal amount of $5 or $10 per annum. 

Membership in the Fund Made Optional. About that 
time a movement was started among the teachers against the 
compulsory contribution. It was claimed that participation 
in the retirement fund was a private not a public matter and 
that the state had no constitutional right to compel the teachers 
to contribute. The compulsory principle was branded as 
''dangerously socialistic."^ A persistent movement carried 
on by some of the more violent opponents of the plan finally 
secured from a majority of the teachers an expression of 
opinion against it, and in July, 1902, an amendment to the 
law was enacted, under which any contributor who filed with 
the board of trustees a notice of his desire to withdraw from 
the fund could be released." Commenting upon the effect of 
this law, one of its leading proponents wrote : 

Since that time over one-fourth of the teachers have with- 
drawn from all share in this sort of insurance, and more are 
withdrawing every day, thereby reducing the liabilities of the 
fund. This marks the end of any general interest in a teachers' 
'pension' or retiring fund. The 'pension' is a lost cause. 
The recent reduction of annuities from $600 to $240 is a 
convincing argument against the system. 

While the proponents of the optional system were of course 

n'his attitude was well reflected in an article by Mr. Edward Manley 
of the Englewood High School in Chicago, which appeared in the Edu- 
catioJial Review of 1002, p. 156. The following comments of the writer 
with regard to retirement funds generally are interesting: 

"Only in the case of teachers and other employees of school boards 
has this form of socialism become law in this country. In some states 
there are statutes by which a part — generally one per cent. — of the salaries 
of all employees of school boards has been withheld and put into a 
'pension fund.' Money thus obtained has been or will be used to pay 
annuities to those who have resigned their positions after teaching the 
required number of years. Such legislation is dangerously socialistic and 
would fail utterly if applied to a less docile and submissive class of our 
citizens." 

^The amendment read as follows: "Any public-school teacher or 
public-school employee, a part of whose salary is now or may hereafter be 
set apart to provide for the fund herein created by this act, may be 
released from the necessities of making further payments to said fund 
by filing a written notice of his or her desire to withdraw from complying 
with the provisions of this act." 

223 



Teachers' Pension Systems in the United States 

wrong in thinking that they had succeeded in breaking down 
any general interest in a retiring fund, they had seriously 
crippled its development for the next few years. 

During the period from 1901 to 1907, when the fund 
operated on a voluntary basis, as many as 2,000 teachers with- 
drew from the fund, and very few new teachers joined it; 
and along with the weakening of the fund from outside, an 
internal destruction was going on. The resources of the fund 
were falling rapidly and at the same time the disbursements 
were rapidly increasing on account of the natural but unpro- 
vided-for increase in the number of retirements. Pensions 
were reduced again and again. The first reduction in 1901, 
which amounted to a sudden drop from $600 to $240, was 
followed by several further reductions during the next six 
years. The last reduction, made in 1906, cut the pension down 
to $135. Still the resources were insufficient. The capital 
of the fund had to be drawn upon, causing some of its securi- 
ties to be sold. All these reductions imposed a considerable 
hardship upon the beneficiaries of the fund and the efficiency 
of the schools. The loss of confidence in the fund is illus- 
trated by the fact that in one month about 1,000 teachers 
withdrew. 

Soon the teachers themselves realized the seriousness of 
the situation and started a movement to save the fund which 
they had so nearly destroyed, and to induce those teachers 
who had withdrawn to reenter and to bring in those who 
failed to join during the optional period. They had to secure 
legislation which would make membership compulsory for all 
new entrants, thus opposing the principle of voluntaryism 
for which they had fought in 1901. Through the last six- 
teen years they have devoted considerable time to two objects : 
to regaining lost membership, and to securing legislation for 
city contributions. But they still ignore the important fact 
that the financial basis of the system is itself unsound and that 
the remedy lies only in reorganization. 

224 



Systems With Inadequate Reserves : Chicago 

City Contribution and Compulsion for New Entrants 
Since 1907. During the rapid decline of the fund a move- 
ment was started by the teachers' association to secure legis- 
lation covering the following points : ( i ) the city to contribute 
to the fund; (2) membership to be compulsory for all new 
entrants; and (3) the members of the fund to have a majority 
representation in the board of trustees. With this movement 
the second period in the history of the fund began. No change 
in the unsound method of operation was contemplated. The 
recommendations made by the actuary in 1901, to put the 
fund on a sound basis, were forgotten. It was evident that 
the majority of the teachers would have opposed any such 
increase of their contributions as suggested by the actuary. 

Two bills were prepared by the teachers' associations, both 
of which were passed by the legislature on May 24, 1907.^ 
One of these provided that the city should contribute to the 
retirement fund the interest on all school funds. The other 
struck out the 1895 provision which prohibited the city from 
contributing to the fund. It allowed all non-contributors 
until the end of the year to join the fund, provided they paid 
their back contributions. Besides granting a city subsidy, 
it offered them the following inducements: (i) all services 
rendered outside of Chicago were to be credited for retire- 
ment, providing the teacher paid contributions for that period ; 
(2) the fund was to be managed by a board of nine, six of 
whom should be teachers, two members of the board of 
education, and one the superintendent of schools; (3) the 
contributions for the younger teachers were to be lower than 
under the old plan. The scale of contributions was arranged 
as follows: during the first 5 years of service, $5 annually* 
during the second 5 years, $10; during the third 5 years, $15, 
and after 15 years of service, $30. Such a scale tended to 
attract the younger teachers, who otherwise were not inter- 
ested in a retirement fund, and to keep away the older teachers 

^Illinois, Acts, 1907, May 24, p. 529-34. Bills 842 and 843. 
225 



Teachers' Pension Systems in the United States 

who, being nearer retirement, would have imposed upon it 
much greater burdens. The provisions making membership 
compulsory for all new entrants assured the fund a consider- 
able yearly increase of membership. 

At about this time a considerable difficulty arose with regard 
to the city's contribution. Although the city comptroller was 
required by the new law to add to the pension fund the interest 
on school funds, he withheld this money on the advice of the 
corporation counsel that the requirement was an unconsti- 
tutional diversion of public money to a private purpose. 

The teachers' convention thereupon adopted a resolution 
requesting the board of trustees to institute a suit to establish 
the validity of the law. Immediately after its organization, 
the board addressed a letter to the teachers, stating that "in 
order to make it clear that the payment of money for teachers' 
pensions is for the benefit of the public and therefore for a 
public purpose, it will be necessary to collect data to show that 
in practical operation the pensioning of public employees has 
proved to be a public benefit."^ It urged the teachers to sign 
a petition requesting the board of trustees to obtain from the 
board of education one month leave of absence for the presi- 
dent of the board of trustees for the purpose of preparing 
material for legal proceedings, and also of securing before 
December 31 as many contributors as possible from among 
the 2,000 teachers not then contributing. The petition was 
signed by 3,000 contributors and the leave of absence was 
granted. As a result of the membership campaign about 700 
teachers reentered the fund on or before December 31, 1907, 
and paid in arrears of $32,000 besides their regular annual 
contributions. 

The suit was started on November 19 of the same year, 
and was won in the lower courts. A year later the same ques- 
tion was raised in reference to all the pension funds in Chi- 
cago by an injunction proceeding against the city treasurer 

^Report of the Board of Trustees, Dec. 21, 1912, p. .[3. 
226 



Systems With Inadequate Reserves : Chicago 

to enjoin the payment of any public moneys for pensions to 
policemen, firemen, teachers and other public employees. 
Judge Mack sustained the constitutionality of all the pension 
acts including the interest act above mentioned, in the course 
of his opinion saying: 

The court is clearly of the opinion that the use of public 
money for this purpose cannot be held beyond a reasonable 
doubt to be for a private purpose. On the contrary the court 
believes that the use of public money for the pension fund 
is an application of it to a public purpose. 

He further stated, however, that he did not mean to hold 
that pension legislation gives its beneficiaries a vested interest. 

In 1909 the board of trustees secured legislation which 
confirmed the interest law of 1907.^ A provision with regard 
to credit for outside service was also inserted, which required 
that at least three-fifths of the service must have been served 
in the city. 

The money paid by the city and the contributions and 
arrears paid by new members immediately improved the affairs 
of the fund and permitted the board to increase the maximum 
pension to $225, and, a few months later, to $250. Although 
this was still a very small pension, it represented to the bene- 
ficiaries a considerable increase as compared with the $135 
pension of three years before. A letter addressed by the 
board to the teachers, dated October 22, 1910, stated that 
there were at the time 4,870 contributors and 1,420 teachers 
who did not contribute. "The 1,420 comprise those who had 
withdrawn from the pension law of 1895 and did not take 
advantage of the opportunity to become contributors under 
the law of 1907. Many of those who neglected that oppor- 
tunity wish to have another granted to them."^ 

No reliable actuarial investigations were made to determine 
whether the fund would be able to pay the increased pensions. 
Yet the board stated in its letter that "the policy of the 

^Illinois, Acts, 1909, p. 384-88. 

^Report of the Board of Trustees, Oct. 22, 1910, p. 3-4. 

22J 



Teachers' Pension Systems in the United States 

trustees has been to so administer the fund that the annuities 
need never be reduced, and with that object in view, the inter- 
ests of the teachers just beginning, who may become a risk 
twenty-five years hence, have been preserved by increasing 
the invested fund. The reserve fund needs to be increased 
to $1,000,000. The funds from other sources than teachers' 
contributions should be augmented. How each is to be done 
is a matter for the contributors to decide." 

The sum consumed for annuities will increase year by year 
and the income should increase also. The teachers have been 
generous beyond their means. If the public wishes profes- 
sional teachers, it must assist in some way to make conditions 
such that teachers may feel that if they give their whole energy 
to teaching, they will not come to want when they can work 
no longer. The majority of teachers have financial responsi- 
bilities thrust upon them which renders it impossible to put 
by a competency for the years of disability, were the salaries 
sufficient for oneself. The occupation consumes all of the 
teacher's attention, and with the requirements demanded of 
them in these changing social conditions, no time is left for 
giving heed to business investments.^ 

As shown by these quotations the board ignored the fact 
that the system was fundamentally unsound. While the build- 
ing up of a million dollar reserve was a commendable enter- 
prise it would not put the fund on a solvent basis but merely 
prolong its uncertain existence. 

Encouraged by their success in the matter of legislation in 
1907 and 1909, the board of trustees took steps to secure 
legislation which would authorize the board of education to 
contribute an additional amount, and to enable the teachers 
to join who had failed to do so in 1907. Two bills prepared 
by it became law on July i, 1911.^ The board of education 
was authorized to make an additional annual appropriation 
which together with the interest from school funds would 
equal the total amount contributed by the teachers, and the 

iReport of the Board of Trustees, Oct. 22, 1910, p. 4. 
^Illinois, Acts, 1911, p. 511-12. 

228 



Systems With Inadequate Reserves : Chicago 

non-contributors were given one year's time to join the fund 
on condition that they pay their back contributions with 
interest. 

The next action of the board was to increase the pension 
from $250 to $300. This increase was adopted on the basis 
of a report of the committee on increase, dated February 17, 
1912, which stated: "We are desirous of giving the whole 
income to the pensioners as rapidly as possible but, at the 
same time, do not think it wise to advance immediately to the 
maximum figure, $400, lest our income may not meet our 
outgo. "^ Some calculations were made by the members of 
the committee but these calculations were not reliable and no 
actuarial investigation or valuation of the assets and liabili- 
ties of the fund was made. 

The two acts passed in 1911 and the subsequent increases 
of the fund's resources and of the amount of annuity paid 
considerably strengthened the once shattered confidence of the 
teachers in the fund. Within one year more than 500 non- 
contributors returned to the fund and paid in about $65,000 
in "lump sums" (back assessments) and about $14,000 in 
current contributions.^ On account of the increase in the 
rate of the city contribution, the income from this source 
more than doubled during the year 19 12, jumping from 
$78,000 to $185,000,^ and the excess of income over disburse- 
ments also about doubled, increasing from $93,000 to 
$182,200. During the four years 1909-1912, the capital of 
the fund increased 400 per cent, reaching on June i, 1913, 
$468,000. 

Desiring to find out how many teachers from among the ap- 
proximately 800 who, having completed 25 years of service 
were eligible to retirement, would retire if the pension were 
increased from $300 to $350, and how many more would 
retire if it were increased to $400, the board sent out a ques- 

iReport of the Board of Trustees, 1912, Feb. 17, p. 16. 
2Report of the Board of Trustees, 1912, Dec. 21, p. 44. 
•Year ending July i, 1912. 

229 



Teachers' Pension Systems in the United States 

tionnaire. On the basis of the returns, the board decided in 
December, 1912, to increase the pension to $350.^ This was 
the second $50 increase in the same year. 

The great activity of the teachers in the matter of obtaining 
new pension legislation was continued the next year. While 
the law of 191 1 established the principle of equal contributions 
by the teachers and by the city, the bill prepared by the board 
of trustees in 19 13 authorized the board to contribute twice 
the amount of the teachers' contributions. 

No increase of the teachers' contributions was contem- 
plated, although the average salaries had steadily increased as 
shown in the following table :^ 

1887 $641 

1897 725 

1904 812 

1907 857 

1909 911 

1911 988 

1913 1,054 

The bill became a law on June 26, 19 13. It made manda- 
tory upon the city what had been permissive under the law of 
1911, the contribution of an amount equal to that contributed 
by the teachers. It also gave another opportunity, the fourth 
and the most ample, to enter the fund to those who had 
hot theretofore entered. They were given three years time 
within which to do so. 

Meanwhile the disbursements had continued to increase 
more rapidly than the income, as shown in the following table, 

Year Ending Annual Annual Annual Surplus 

Dec. 31 Receipts Disbursements (Excess of Receipts 

Over Disbursements) 

1912 $298,400 $116,200 $182,200 

1913 267,200 157.400 109,800 

1914 278,900 185,100 93>8oo 

The excess income of 1914 fell even below that of the year 
19 10, when the city contributed only interest on school funds. 
During the following two years, however, the excess income 
increased on account of "lump sum" payments made by for- 

iReport of the Board of Trustees, Dec. 21, 1912, p. 52, 53. 
^Compiled from Reports of Chicago Board of Education, 1909 (p. loi) 
and 191 1. The figure for 1913 was taken from Educational Survey of 
Cleveland Foundation, vol. on Teaching Staff, 1916, p. 20. 

230 



Systems With Inadequate Reserves : Chicago 

mer contributors who reentered the fund in large numbers 
before the time Hmit (July, 1916) expired, and back assess- 
ments paid by annuitants who were completing their pay- 
ments of $450. 

First Step towards Actuarial Reorganization in 191 7. 

The move for actuarial reorganization of the fund came from 
outside the fund. Public opinion in the state began to realize 
that all was not well with their pension funds. The state ap- 
pointed a commission in January, 1916 "to investigate the oper- 
ation of all pension laws heretofore enacted in the state, to 
gather together all available information as to the present and 
probable future cost of maintaining the funds created by said 
laws, and to collect all available information in regard to the 
operation of similar laws in other states and countries." The 
commission was authorized to employ actuarial assistance. 

In investigating the Chicago fund, the commission found 
that on account of accrued liabilities the fund had an actuarial 
deficiency of more than five million dollars, that "this de- 
ficiency will increase under the present method of operation" 
and that "the time is therefore at hand to put the system on 
a sound financial basis."^ 

After discussing the matter with the retirement board, the 
commission prepared a bill intended to provide the fund with 
a more adequate income. Contributions of the members were 
increased according to the years of teaching experience. Those 
with 4 years or less were to contribute $15 ; those with 4 to 8 
years were to contribute $25 ; those with 8 to 12 years were 
to contribute $30; and those with more than 12 years were 
to contribute $40. 

The aggregate contributions of a member were raised from 
$450 to $800. With regard to retirement conditions a new 
provision was introduced requiring that the applicant be at 
least 50 years of age. 

lAt the same time the commission noted that the fund is in better 
financial condition than most of the funds in the state. 

231 



Teachers' Pension Systems in the United States 

There was little in these two provisions that could arouse 
the enthusiasm of teachers. Another provision which, how- 
ever, made the bill more acceptable to them was the require- 
ment that the city must (not merely might as heretofore) 
contribute twice as much as the teachers. The result of the 
bill would thus be that while the teachers would have con- 
tributed about two and a half times as much as before, the 
city would have contributed at least five times as much. 

The fact that the increase of these contributions was doubly 
compensated by the increase in the city's contributions was, 
however, little discussed by the teachers. The attitude was 
taken that the bill required new sacrifices of them and that 
they should agree to it only on the condition that another 
bill which they themselves prepared providing for their tenure 
of office (a matter then greatly discussed) was passed. A 
committee was appointed and the necessary funds for their 
work provided, to request of the legislature that the tenure 
of office bill should first be passed, and unless passed, to re- 
fuse to support the pension bill. The pension measure was 
not discussed on the ground of principle.^ It was viewed 
merely as a tool for securing another measure, the merits of 
which had really nothing to do with the pension issue. 

Several features of the old system, the change of which 
would be very desirable from a broad social point of view, were 
left unchanged in the bill. In the first place the tontine fea- 
ture was preserved under which the teacher who resigned or 
was dismissed before 15 years of service forfeited one-half 
of all he contributed and all the interest on that amount; 
the teacher who resigned or was dismissed after 15 years of 
service forfeited all, not merely half, of his contributions; 
and the dependents of the deceased teacher had no claim to 
his contributions. The abolition of this tontine feature and 
the establishment of a savings feature instead of it would have 

^Reports and Circulars in the Proceedings of the Board of Trustees, 
Feb. and March, 1917. 

232 



Systems With Inadequate Reserves: Chicago 

required still larger contributions from teachers and would 
have therefore met with opposition. 

In the second place the composition of the board in which 
the public officials were in the minority, although the major 
part of the fund's money would have been contributed by the 
public, was preserved apparently because a change in it would 
have raised vigorous objections from the teachers. 

In the third place, no change was made from a "flat" to a 
"graded" annuity, because the latter, although highly desir- 
able from the point of view of efficiency of service and pubHc 
interest, was not popular with the majority of the teachers. 
Furthermore, the age limit was fixed rather low, still allowing 
early retirements, and the provision allowing the board to 
prorate benefits was maintained, thus showing evidence that 
even under the new bill the sound operation of the system was 
not altogether assured. 

The bill in no way provided for a sound system. It can 
be regarded only as an attempt to mend the affairs of an un- 
sound system in such a way as to meet the traditions and prej- 
udices which have grown up during its operations. 



^ZZ 



CHAPTER XV 

THE MASSACHUSETTS FUND, THE FIRST SCIEN- 
TIFIC SYSTEM ; THE CONNECTICUT FUND 

Of all the teachers' retirement systems in this country the 
Massachusetts system was the first to be reorganized, at least 
partly, on an actuarial reserve basis. The contributions of 
the teachers are deposited to a reserve, v^hereas the contribu- 
tions of the government are immediately disbursed. The sys- 
tem operates, therefore, on what may be termed a "semi-re- 
serve" basis. 

History of the System. The first state-vvide teachers' pen- 
sion legislation enacted in Massachusetts was embodied in a 
law passed in 1908/ since superseded by the law of 191 3, de- 
scribed below. This law was effective only in cities and towns 
where, upon petition of not less than 5 per cent of the voters, 
it had been submitted at the following city or town election 
and accepted. Under this act the school committee of such 
a city or town could retire any teacher who was 60 years of 
age or over and had served 25 years, granting him a pension 
not to exceed one half of his salary (max. $500). No contri- 
butions were required from teachers. The system was to be 
operated on a purely "cash disbursement" basis, the amount 
needed for the payment of pensions being appropriated each 
year. 

The cities and towns of Brookline, Cambridge, Dalton, 
Framingham, Hardwick, Lynn, Marion, Milton, Nahant, 
Pittsfield, Swampscott, Wareham, Wellesley and Winchester 
availed themselves of this act. 

^Massachusetts, Acts, 1908, ch. 498 and ch. 589. 



Massachusetts and Connecticut Funds 

In the year 1910^ a report on old age pensions, annuities 
and insurance was issued by a state commission which had 
been appointed in 1907. It contained considerable data on 
social insurance, annuities and pension systems in this coun- 
try and abroad, and gave a considerable impetus to the pension 
movement in Massachusetts. 

In accordance with a resolution of the legislature in 191 1, 
requesting the board of education to investigate the advisa- 
bility of establishing a state-wide retirement system, a report 
was submitted in 191 3 which stated in part:^ 

A careful examination of the methods and results of pro- 
viding retirement allowances for teachers in other states and 
countries and of the conditions peculiar to Massachusetts, 
leads the board to the conclusion that if general legislation is 
to be enacted providing for the payment by the state or local 
community of retirement allowances to superannuated 
teachers, such legislation should be based on the general prin- 
ciples of social insurance as given effect in the act providing 
retirement allowances for state employees (under act of 

1911)- 

The report explained the principle of social insurance to be 

substantially as follows : 

By means of state legislation and under state administration 
or at least supervision, designated classes of persons are re- 
quired to insure themselves against loss or decrease of earning 
power due to age, accident, invalidity or other similar con- 
tingencies. The person insured is required to make contri- 
butions in amounts varying according to circumstances, 
towards meeting the cost of this insurance; and he also shares 
in a measure in the administration of the funds established 
for that purpose. That part of the cost of the insurance which 
is not met by the contribution of those insured is usually pro- 
vided by the state and by the employing authority in shares 
varying according to conditions existing in the employment. 

A bill for the establishment of a retirement system embody- 

iMassachusetts Commission on Old Age Pensions, Annuities and In- 
surance, Jan., T910. Mass. House Docs., 1910, No. 1400, 410 p. 

^Massachusetts Board of Education. Special Report on Teachers' 
Retirement Allowances, Jan., 1913, p. 6. (In Mass. House Docs., 1913, 
No. 1926.) 



Teachers' Pension Systems in the United States 

ing these principles was submitted together with the report 
and was passed on June 19, 191 3, to go into effect on July i, 

19 1 4. The law was subsequently amended in the years 1914, 

1915, 1916 and 1917. 

Provisions of the System. The law applies to all teachers, 
principals, supervisors and superintendents employed in pub- 
lic day schools^ within the commonwealth, outside of Boston, 
which has a separate system. 

The law provides that any teacher may retire voluntarily 
after reaching 60 years of age and receive the retirement 
benefit. Membership in the fund is made compulsory for all 
teachers entering the service after July i, 19 14. Those 
already in the service may enter the fund upon application. 
Of the latter 6,185 joined the fund before the end of the 
year 19 14. 

The system consists of two funds: the annuity fund con- 
stituted by the teachers' contributions, and the pension fund 
consisting of state appropriations. 

The annuity fund is put squarely on an actuarial reserve 
basis, and this constitutes doubtless the most important fea- 
ture of the system. In this respect the first report of the 
board says:^ 

As many pension systems throughout the country have come 
to grief through lack of sound foundation, the Massachusetts 
law provides that the retirement system shall be on a strong 
financial and actuarial basis. By law, reports are to be made 
to the state insurance commissioner and the latter ex-officio 
is a member of the teachers' retirement board. The retire- 
ment system is operating upon the mortality table used by 
most of the life insurance companies doing business in this 
commonwealth. 

The contributions of the members are paid into the annuity 
fund and carried to their respective accounts. They accumu- 

iThis does not include industrial schools, the teachers in which come 
under the provisions of the law granting retirement allowances to state 
employees generally. 

^^Massachusetts Pub. Docs. 1915, No. 109, p. 7. 

236 



Massachusetts and Connecticut Funds 

late with interest' and constitute for each member an indi- 
vidual reserve from which his annuity is eventually paid. The 
amount of the contribution is determined, as stated, according 
to mortality tables. 

The annual rate of contributions is fixed by the retirement 
board on July i of each year, but must neither be less than 
3 per cent of salaries nor more than 7 per cent in any year 
and not less than $35 nor more than $100. The board adopted 
the 5 per cent rate in 19 14, and in 191 5 it stated that "as the 
5 per cent rate seems to meet with the approval of practically 
all of the members of the retirement association it is probable 
that the 5 per cent rate will be continued indefinitely.'"' 

The law provides that no person shall contribute a larger 
sum than is necessary to purchase an annuity of $500 at age 
60, or $600 at age 65, or approximately $750 at age 70.^ 

Teachers appointed before 1914, who have served at least 
15 years in the state, receive the same pension as if they con- 
tributed for thirty years. The minimum retiring allowance, 
consisting of the annuity plus pension, is moreover fixed at 
$300. 

A disability clause, effective July i, 191 7, provides for 

^The original law provided that interest should be credited at 
3 per cent. An amendment adopted in 1916 provided that the interest 
actually earned shall be credited. Four per cent, was earned in 1916. 

^Bulletin No. 2, 1915, p. 6. 

3"A teacher may determine approximately what his own annuity 
will be by multiplying his accumulated assessments by certain per- 
centages at different ages of retirement. At age sixty the annuity will 
be approximately 9.38 per cent of the accumulated assessments ; at age 
sixty-one, 9.71 per cent; at age sixty-two, 10.07 PC cent; at age sixty- 
three, 10.45 per cent; at age sixty-four, 10.86 per cent; at age sixty-five, 
11.31 per cent; at age sixty-six, 11.78 per cent; at age sixty-seven, 
12.29 per cent ; at age sixty-eight, 12.84 per cent ; at age sixty-nine, 
13-43 per cent ; and at age seventy, 14.07 per cent." 

"Examples — X joins the retirement association in 1914 at age thirty. 
If he contributes $35 per year for thirty years his accumulated assess- 
ments will amount at 3 per cent interest to $1,683.87. If he retires at 
age sixty his annuity, derived from his own contributions, will be 
9.38 per cent of this amount, or approximately $157.95. Under the law 
he is entitled to a pension of equal amount from the state treasury, 
making the total retiring allowance approximately $315.90." — Massachu- 
setts Retirement Board, Bulletin 2 (1914). 



Teachers' Pension Systems in the United States 

disability retirement after 20 years of service upon a smaller 
retiring allowance. A refund of teacher's own contributions 
with interest is provided upon death, resignation or dismissal. 
Refunds are made in one sum if withdrawal takes place before 
six annual contributions have been paid; otherwise in four 
annual instalments. Some withdrawing teachers have left 
their contributions on deposit as they expect to reenter the 
service at some future date. Another interesting feature is 
that a member may select a smaller annuity for himself with 
the provision that any balance of his contributions with inter- 
est may be paid to his legal representatives in case he dies 
before the total amount of annuity payments received equals 
the amount of his contributions with interest to the time of 
retirement. 

After consulting with the insurance commissioner, the board 
adopted as the basis of its computation of the probable mor- 
tality of the members of the fund the American experience 
table, the standard table prescribed for life insurance companies 
doing business in Massachusetts. The law provides, how- 
ever, that the board may change the mortality table from time 
to time. If this table represents the true mortality rate of the 
members, and if the assumed rate of interest is realized by 
investments of the fund, the fund is absolutely solvent. 

It will undoubtedly be necessary for the board in the near 
future to change the mortality table because the recent experi- 
ence of England and that of the city of New York proved 
that the mortality of the teachers is lower than that obtain- 
ing among the population at large and that their annuities 
therefore cost more. Whereas the American experience table 
shows that a person 60 years of age is expected to live 13.4 
years longer, the New York City experience shows that a 
teacher 60 years of age is expected to live only 12.7 if a 
man, but as many as 16.5 years if a woman. ^ Since the women 
teachers are greatly in the majority it is evident that the differ- 

^New York City Commission on Pensions. Report on Teachers' Re- 
tirement Fund, 1915, p. 38. 

238 



Massachusetts and Connecticut Funds 

ence between the American experience mortality rate and the 
teachers' mortality rate is considerable. 

The management of the fund is entrusted to a board of 
seven members, consisting of the insurance commissioner, 
the bank commissioner, the commissioner of education, three 
representatives elected by the members of the fund, and one 
other person elected by the six members first mentioned. It 
is evident that inclusion in the board of the insurance and bank 
commissioners will assure the fund a proper financial manage- 
ment. The board has elected a secretary well acquainted with 
actuarial problems. 

The report of the retirement board, as of December 31, 191 6, 
states that the membership of the fund was 9,667. Of these 
1,591 entered the service for the first time in 19 16. Two 
hundred twenty-six members were on the retired list and the 
annual retiring allowance for the year amounted to $85,078, 
of which only $837 was derived from contributions from the 
115 members who paid assessments before retiring, and the 
balance was derived from state appropriations. The total 
capital of the association amounted to $824,105. 

State Appropriation Not On a Reserve Basis. The weak 
point of the Massachusetts system lies in the fact that the 
state appropriation for pensions is not carried on a reserve 
basis. The state merely appropriates each year the amount 
needed for the payment of pensions for that year. This will 
naturally result in a comparatively small cost to the state in 
the beginning and a considerably heavier cost in the future, 
as shown by the following rough and probably high estimate 
made in the board of education's report of January, 1913.^ 

Years Annual Cost to the State 

1914-20. From $75,000, increasing to $120,000 
1920-30. " 150,000, " " 300,000 

1930-50. " 250,000, " " 400,000 

Connecticut Teachers' Retirement Fund. Outside of an 
act incorporating the Connecticut Teachers Annuity Guild, 

^Massachusetts House Docs., 1913, No. 1926, p. 17. 
239 



Teachers' Pension Systems in the United States 

which is a private association, the only retirement legislation 
that was placed on the Connecticut statutes up to the year 191 7 
were the acts of 191 1 allowing the cities of New Haven and 
New London to establish a retirement fund. 
I In the year 191 5 an attempt was made by the teachers of 
Connecticut to secure retirement legislation providing for the 
establishment of a state-wide non-contributory retirement sys- 
tem. No special fund was to be provided for that purpose. The 
state was to appropriate each year the amount necessary for 
the payment of that year's pensions. The bill was passed by 
the legislature but vetoed by the governor on the ground of 
unconstitutionality. 

After this defeat the leaders of the pension movement 
dropped the idea of securing a non-contributory pension and 
framed a bill following very closely the retirement plan estab- 
lished in Massachusetts. The bill was introduced in the legis- 
lature of 191 7, was passed without considerable opposition 
and became a law on July i, 191 7. 

Benefits. The only important departure from the Massa- 
chusetts plan was with respect to eligibility for retirement. 
Under the Massachusetts plan, 60 years was fixed as the 
minimum age for retirement regardless of length of service. 
In Connecticut, in order to receive a retirement allowance 
at 60 years of age, the teacher must have completed 15 years 
of service. On the other hand, if the teacher has completed 
35 years of service, he or she may retire regardless of age. 
This departure from the Massachusetts plan is rather a step 
backward than an improvement. Its purpose was evidently to 
avoid the opposition of the teachers who thought that in case 
of long service, retirement should be allowed at an early age. 

The retirement allowance consists of two benefits : an 
annuity and a pension. The annuity is of such amount as the 
teacher's contribution would purchase, and the pension paid 
by the state is of a similar amount as in Massachusetts; an 
additional pension is paid by the state to teachers who had 

240 



Massachusetts and Connecticut Funds 

been in the service prior to the establishment of the system 
and who had served 15 years and become eHgible to retire- 
ment. This pension is to be sufficient to make the total retire- 
ment allowance equal the amount they would have received 
had they contributed for thirty years instead of only since 
July I, 1917. 

Disability incurred before the age of 55 entitles the teacher 
merely to a refund of his or her contributions with compound 
interest. After reaching the age of 55, the teacher may, in 
case of the approval of the retirement board, be retired under 
the same provisions and privileges as outlined above for 
service pensions. 

The ordinary death benefit, where death occurs before 
retirement, is only a refund of contributions plus compound 
interest. Death after retirement usually results in the cessa- 
tion of the pension, but it may not entirely result in this way, 
for every teacher has the right, upon retirement, to choose 
a smaller pension with the provision that the balance shall 
be paid to his dependents or assignees on his death in the 
form of a lump sum or a further pension. 

Contributions with compound interest are refunded to 
teachers who resign or are dismissed before retirement. Those 
who have taught for 10 years have the alternate choice of 
leaving their contributions on deposit and drawing such an 
annuity as their amounts have purchased. 

Contributions. The maintenance of the fund is practically 
the same as in Massachusetts. The teacher contributes 5 per 
cent of salary with a maximum of $100 and a minimum of 
$15 per year. Payments may cease after they have become 
sufficient to buy an annuity of $500 at age 60 or after they 
have been made for thirty years. The state pays the re- 
mainder, including (i) administrative expense, (2) an amount 
large enough to pay the pensions for service prior to July i, 
191 7, and (3) the state's half of the regular retirement allow- 
ance paid to teachers for service after the above date. 

241 



Teachers' Pension Systems in the United States 

Management. The act entrusts the management of the 
fund to a retirement board consisting of the following five 
members : 

1. The state insurance commissioner. 

2. The state bank commissioner. 

3. The secretary of the state board of education. 

4 and 5. Two members to be appointed by the governor, 
one to serve two years and the other four years. Thereafter, 
the teachers' association shall elect these two members for 
overlapping terms of four years. 

While representing a substantial advance over the majority 
of the existing systems, the Connecticut system, like that of 
Massachusetts, is not as advanced as the systems of New 
York City and Pennsylvania. The features which are open 
to criticism, and which have been pointed out in connection 
with the Massachusetts system, are that the contributions are 
not graduated according to age, so that the benefits in the 
cases other than those of average entrants are, therefore, 
inadequate, and the contributions of the state are not made 
on a reserve basis. The lack of adequate disability provision 
is also a serious defect. As this defect in the original scheme 
of Massachusetts has been remedied by a subsequent amend- 
ment it may be expected that Connecticut will soon take a 
similar action. 



242 



CHAPTER XVI 

THE NEW YORK CITY FUND 

Both on its historical and on its scientific side, the story 
of the New York City fund, reorganized in 191 7 after twenty 
years of a career apparently prosperous but actually pre- 
carious, is of unusual interest. 

History of the Old Fund. Prior to 1901 there were two 
separate teachers' pension funds in the city of New York : 
one in the boroughs of Manhattan and the Bronx, comprising 
the old city of New York, established in 1894;^ the other in 
the borough of Brooklyn, established in 1895.^ The income 
of the New York fund originally consisted of absence deduc- 
tions, donations, legacies and gifts; that of the Brooklyn fund 
of a contribution by the teachers of i per cent of their salaries. 
A new source of income was added to both funds in 1898, 
consisting of 5 per cent of the excise taxes. 

The pension provided by the New York fund was one-half 
of the final salary, not exceeding $1,000. It would be granted, 
however, only after 30 years of service in the case of a 
woman, and 35 years in the case of a man; and only upon the 
recommendation of the city superintendent that the teacher 
was mentally or physically disabled for the performance of 
duty. In addition a two-thirds vote of the board of educa- 
tion was required. 

Under the provisions of the Brooklyn fund, pensions of 
one-half of the final salary, not exceeding $1,200, were to be 
granted at the discretion of the board of education to women 
teachers not less than 55 years old and to men teachers not 



iNew York, Acts, 1894, ch. 796. 
2New York, Acts, 1895, ch. 656. 



243 



Teachers' Pension Systems in the United States 

less than 60 years old, after a teaching experience of 30 years, 
of which 20 years must have been in Brooklyn schools. No 
retirement was to be made unless the teacher had paid into 
the fund 20 per cent of the last annual salary before retire- 
ment. 

The two funds were merged in 1901' and the provision for 
an income from unrefunded absence deductions, contained in 
the old New York scheme, was also applied to the Brooklyn 
teachers, while the requirement of a contribution of i per 
cent of salaries, which had obtained in the Brooklyn system, 
was dropped. The revenues of the fund were again increased 
in 1905 by a provision that the contribution of i per cent 
from salaries should apply to all teachers in New York and 
Brooklyn. 

The law consolidating the funds also enlarged their benefits. 
Under the new law, a disabiHty pension after 30 years of 
service (20 in New York City) was allowed at one-half of 
the salary received at the date of retirement, with a minimum 
of $600 and a maximum of $1,000 for teachers, $1,500 for 
principals and $2,000 for supervising officials. A pension 
of like amount was permitted at 65 years of age, after 30 
years' service (20 in New York City). The granting of a 
disability pension required the recommendation of the city 
superintendent and a two-thirds vote of the board of educa- 
tion. There was no such requirement for the "age 65" 
pension. 

The small disbursements from the fund naturally resulted 
in a favorable balance during the earlier years and created 
an impression of prosperity. During this accumulative stage 
the receipts, disbursements, annual surplus and total balance 
of the fund were as follows : 

Year 

1895 
1900 
1905 
1909 

iNew York, Acts, 1901, ch. 466. 

244 



Annual 


Annual 


Annual Surplus 




Receipts 


Disbursements 


(Excess of Receipts 
Over Disbursements) 


Capital 


$66,688 


$16,425 


$50,263 


$75,324 


469,484 


277,015 


192,468 


817,576 


738.106 


664,258 


73,847 


1,298,215 


963,840 


956,905 


6,984 


1,626,077 



The New York City Fund 

The fund, as thus indicated, increased steadily during the 
first fourteen years. On December 31, 1909, it had to its 
credit an accumulated reserve of more than $1,600,000. The 
next year, however, the fund reached its crisis. The disburse- 
ments overtook and exceeded the revenues, causing the first 
deficiency to appear. Then the fund began rapidly to decline. 
The annual disbursements were now running above a million 
dollars. The annual deficiencies became heavier ; the fund was 
increasingly forced to draw upon the reserve accumulated dur- 
ing the first fourteen years. It took just five years to exhaust 
it completely. The decline of the capital is shown in the fol- 
lowing table : 





Annual 


Annual 


Annua! 




Year 


Receipts 


Disbursements 


Deficiency 


Capital 


1910 


$1,078,806 


$1,107,918 


$29,111 


$1,596,965 


191I 


1.099,039 


1,181,600 


82,561 


1,514,404 


I912 


1.168,297 


1,305,438 


137,141 


1.377.263 


I913 


1,183,598 


1,465,607 


282,008 


1,095,255 


I914 


1,088,658 


1.201,312 


112,653 


982,601 


1915 


1,060,679 


1,214.298 


153,619 


828,982 



Unsuccessful Attempts at Reorganisation. In order to 
check the rapid decline of the fund, the board of retirement 
adopted several measures, which, however, failed to postpone 
for any considerable time the day of collapse. In September, 
1913, the refunding from the fund of deductions for absences 
subsequently excused was discontinued. When this proved 
ineffective, the board of retirement resolved on February i, 
191 5 to cease granting new retirements. Some of the appli- 
cants were continued in the service, others were granted leave 
of absence by the board of education for a year on half pay. 
A serious controversy, however, arose between the board of 
education and the comptroller of the city of New York over 
the validity of this action, and much hardship ensued for those 
teachers whose salaries were held up. Some of those who 
were granted leave of absence returned to active service 
although they were unable to do their work.^ 

Another expedient resorted to in 19 13, 19 14 and 191 5 was 

'Seventh Report of the Board of Retirement, 1915, p. 18. 
245 



Teachers' Pension Systems in the United States 

that of borrowing the next year's excise taxes. The fund 
still had a capital amounting to about $828,000, but the law 
allowed the use only of the interest on the permanent capital 
of $800,000. Finally, in April, 1916, the legislature passed a 
new law permitting the fund to draw on the capital until 
reduced to $500,000. Had not this measure been adopted the 
fund would have been unable to make its next monthly pay- 
ments. 

An actuarial investigation made in 1915^ showed that if 
the existing provisions of the fund were continued, the annual 
pension expenditure would continue to increase until it 
amounted to more than 20 per cent of the payroll; and that 
to be solvent on a strictly reserve basis, the fund would have 
to provide for a tremendous deficiency of almost fifty-five 
million dollars. 

The Bill of 19 16. As early as 19 10 there had been heard 
demands for a reorganization of the fund on a sound basis, 
and these had been enforced by an official report made in 
1912;^ but it was not until 1915 that reorganization became 
a live question. 

In 19 1 3 the New York Bureau of Municipal Research had 
conducted for an aldermanic committee an investigation of 
the police pension fund, the annual deficiencies of which 
amounted to more than a million dollars. It published an 
exhaustive report in which it set forth "scientific conclusions 
reached that may serve as a basis for intelligent consideration 
of pension plans for employees in other branches of the serv- 
ice."^ As a result of this report a commission on pensions 
was appointed by the mayor to investigate all the nine pension 

^New York (City) Commission on Pensions. Report on the Teachers' 
Retirement Fund, 1915, p. 10. 

-Hutcheson, W. A. Report by actuary upon the condition of the 
New York public school teachers' retirement fund. (In New York City 
Board of Education, sixth annual report of the secretary of the Board of 
Retirement, 1913.) 

^New York Bureau of Municipal Research. Report on the Police 
Pension Fund of the City of New York, 1913, p. 11. 

246 



The New York City Fund 

funds of the city and to prepare a plan for the reorganiza- 
tion of the fund. 

The commission had made but Httle progress on the com- 
prehensive program which it had laid out when it was urged 
to set aside all other work and devote its attention to the 
teachers' retirement fund, the bankruptcy of which had now 
become manifest. The difficulties in the way of formulating 
an equitable and financially sound permanent system were, as 
always, many and grave. There was, however, the additional 
danger that such a plan might not be in accord with the gen- 
eral policy to be decided upon later for the city's employees 
generally, and might impose upon the city a larger proportion 
of cost for one group of employees than for the other groups. 

In spite of these difficulties and the lifnited time available, 
the commission prepared and published its report in January, 
1916.^ In submitting it, the chairman of the commission 
wrote : 

In this report * * * following good practice elsewhere, 
and guided by past mistakes of New York City in dealing 
with pension problems, a proposal is made to organize a retire- 
ment system which will be free, on the one hand, of uncer- 
tainties and, on the other, will provide a means just to em- 
ployees and taxpayers alike for its financing. It is by no 
means maintained that the conclusions set forth in the report 
are final. They are presented with a view to complete dis- 
cussion and with the expectation that they will be changed 
in the light of fuller wisdom and possibly more mature thought 
which this discussion will produce. Whatever may be the 
judgment on the recommendations, the facts are plainly told 
so that there is provided a complete basis for considering the 
two major questions involved in the problem: First, what 
shall be the conditions of retirement? Second, how shall the 
cost of meeting these conditions be provided? * * * 

It is conceivable, of course, that the cost of the entire pen- 
sion plan may be levied upon the teachers themselves. But 
to do so would mean either to cut down the benefits below a 

^New York (City) Commission on Pensions. Report on the Teachers' 
Retirement Fund, 1916, p. i. 

247 



Teachers' Pension Systems in the United States 

point where they would seem adequate to furnish a proper 
basis of retirement, or to impose an intolerable burden upon 
the teaching force. Similarly, it is conceivable that the entire 
cost might be laid upon the city. But if this were done, the 
burden on taxpayers would be so great that protest would be 
surely evoked, and either reduction or complete stoppage of 
benefits w^ould follow. The middle course of equal division 
of cost is suggested with the adequate safeguard of the inter- 
est of the teachers that in case they withdraw from the service 
prior to retirement their contributions shall be returned to 
them with compound interest. 

The report made the following tentative recommendations : 

1. The present law should be repealed and a new law passed 
which will deal more exhaustively with all details of pro- 
visions than the present law, and will eliminate as much as 
possible the exercise of administrative discretion. 

2. The administration and interpretation of the law 
should be entrusted to a board independent of the Board of 
Education and composed of members administratively and 
technically qualified for the efficient performance of their 
duties. In such board the Department of Education should 
be represented. 

3. The liability to present pensioners should be reduced. 

(a) By a revision of the entire list. 

(b) By the revocation of pensions to disability pension- 
ers no longer disabled. 

(c) By the return to duty of existing disability pension- 
ers who are cured of their disabilities and of service 
pensioners who are not superannuated or otherwise 
disabled. 

(d) By a readjustment of pension benefits in accordance 
with the scale suggested for the retirement of future 
beneficiaries. 

4. The fund's liability for future pensions to teachers 
now in the service should be reduced. A change of existing 
provisions by the introduction of a minimum age limit for 
retirement and other details discussed in this report will mate- 
rially reduce the fund's present liability. 

5. The future contributions of teachers nozv in the service 
should be increased to cover : 

248 



The New York City Fund 

(a) One-half of the cost of benefits accruing for services 
subsequent to the reorganization of the scheme, and 

(b) One-half of the cost of benefits accruing for services 
prior to the reorganization of the scheme, except 
when the total annual contribution of individual 
teachers would exceed 8 per cent of salary. 

The scale of contributions will vary according to present 
age and number of years of past service, and should, as a 
matter of expediency, be limited to a maximum of 8 per cent 
of salaries in case of individual teachers. The contributions 
of teachers should be made returnable with compound interest 
at 4 per cent upon separation from service prior to retirement. 

6. Teachers entering the service after reorganisation 
should be made eligible to retirement under the same pension 
provisions as are proposed for teachers now in the service. 
Their contributions should cover one-half of the cost of their 
benefits. Since there are no arrears to be made good, the 
contributions of new entrants into the system will be much 
smaller than those of teachers who are nearing the period 
of retirement. 

7. The city should contribute annually a percentage of 
salaries of teachers sufficient to cover one-half of the cost 
of benefits accruing because of services subsequent to the 
reorganization of the scheme. Such contributions should 
not be available to employees leaving the service prior to 
retirement. 

8. The city should contribute a uniform amount annually 
for the next 60 years to liquidate : 

(a) The fund's liability remaining for pensions on the 
roll at the time of reorganization of the scheme after 
the list of pensioners has been revised as recom- 
mended. 

(b) The fund's liability remaining for future pensions 
on account of services of present teachers prior to 
reorganization after change in benefit provisions has 
been made and the future contributions of teachers 
have been increased to cover back services. 

9. The assets and liabilities should be appraised periodically, 
and necessary adjustments made in all three contributions. 

At about the same time that the commission published its 

249 



Teachers' Pension Systems in the United States 

report, a committee appointed by the Federation of Teachers' 
Associations published a pension plan which differed funda- 
mentally from the city plan. The rates of contributions and 
benefits were fixed more or less arbitrarily without actuarial 
calculations, the committee being of the opinion that no 
actuarial advice was necessary. The plan was unsound but 
contained features which made it popular with the teachers — 
low contributions, retirement after 30 years of service, and a 
pension of one-sixtieth of salary for each year of service. 

The criticism of the teachers was particularly directed 
against the recommendation of the report that regardless of 
length of service no teacher should be retired on a pension 
before 65 years of age, unless disabled. It was urged that 
a teacher who entered the service at 20 and was compelled 
to serve 45 years before becoming entitled to a pension would 
be worn out long before retirement and that such a late 
pension would, therefore, be of little value to the teacher or 
to the schools. 

Early in 1916 conferences were held between representa- 
tives of the commission and of the teachers. As a result of 
these conferences, the city yielded as to the age condition and 
the teachers as to length of service. They agreed that retire- 
ment should take place either after 65 years of age, regardless 
of length of service, or after 35 years of service, regardless 
of age. With respect to the amount of pension, the scale of 
one-seventieth of salary was agreed upon in place of the one- 
eightieth provided in the city plan, and one-sixtieth in the 
teachers' plan. An agreement was also reached on the ques- 
tion of dividing the cost equally, except that the city was to 
assume the entire burden with respect to pensioners already 
retired, and the major part in case of the older present 
teachers. A compromise bill was prepared which provided 
that in the event of resignation, dismissal or death, the mem- 
ber's contributions together with interest were to be refunded 
to him or to his dependents, and that the actuarial equivalent 

250 



The New York City Fund 

of the pension could be taken in the form of various optional 
benefits. The contributions of the teachers were to be funded 
on an actuarial reserve basis and were guaranteed to earn 
interest compounded at 4 per cent. Their amount was actu- 
arially calculated, expressed as a percentage of salary, and 
so graded according to age and sex that every teacher would 
contribute about one-half of the cost of his retirement benefit 
with such limitation, however, that his contribution could in 
no case exceed 8 per cent of salary. An important option was 
given the teachers by which they could reduce their contri- 
bution to 5 per cent, thereby proportionately reducing their 
annuity. The city was to pay — 

( 1 ) the entire pension roll of all the teachers already retired 
(about 1,400 persons) 

(2) one-half of the cost of providing for retirement of the 
present teaching force plus the additional share in 
excess of the teachers' 8 per cent contributions. The 
payment was to be made on a cash disbursement basis, 
the city appropriating each year for each pension fall- 
ing due an amount which together with the amount 
purchased by the teachers' own contributions would 
equal one-seventieth of his average salary for each year 
of service. 

(3) yearly contributions sufficient to accumulate a reserve 
fund from which to pay half the pension of new 
entrants. In the latter case the city was to match 
their contributions dollar per dollar. 

(4) the cost of administering the fund. 

The history of the spirited contest which was waged around 
the reorganization bill will repay the close study of one inter- 
ested in the human and psychological factors which may so 
complicate the attempt to reorganize a pension system on a 
scientific basis. Behind the proposed bill stood the city admin- 
istration, represented by the pension commission, and, as 
already seen, the Federation of Teachers' Associations. 
Opposed to it were large groups of teachers, actuated by vary- 
ing interests in and objections to the plan, who had organized 

251 



Teachers' Pension Systems in the United States 

a Teachers' Pension Association to defeat the bill. The 
conflict between these two organizations, each claiming to 
represent the prevailing sentiment of the teachers, injected an 
element of bitterness into the contest and made easy the intro- 
duction of irrelevant and confusing issues. 

That the plan had provoked opposition from large numbers 
of teachers was not indeed surprising. Alany teachers were 
strongly opposed to having their contributions increased from 
I per cent under the old unsound system to from 4 to 8 per 
cent under the proposed system. The pension association 
argued that even "the lowest of these rates is extremely exces- 
sive);" and it was indeed frequently alleged, quite incorrectly, 
that "nowhere in the world are such high contributions re- 
quired."^ 

Out of this opposition to an increase in the contributions 
there were revived the familiar and time-honored arguments 
against compulsory participation in a pension fund ; and much 
was made, too, of the natural opposition of the younger teachers 
to those features of the plan which seemed to favor the older 
teachers — the assumption by the city of all contributions, in 
excess of 8 per cent of salary, required for making up the 
deficiency of the existing fund, and the grading of pensions 
according to salary. It was urged that teachers, principals 
and superintendents should all be provided with a "flat pen- 
sion" of $750 irrespective of their salaries; that $750 was 

1 The rates of contributions in many of the teachers' pension systems 
abroad are even higher than those proposed, as indicated in the following 
table, which was published by the Federation of Teachers' Associations 
at the time : 

Percentage of Salary Contributed by 

Country Contributed by Teachers Government 

Russia 6 6 per cent of salary 

France 5 Balance of cost 

Austria 3-8 Balance of cost 

Italy 5 6 per cent of salary 

Spain 4 Balance of cost 

Belgium 3 5-5 per cent of salary 

Scotland 4 6 per cent of salary 

Netherlands 7 Balance of cost 

Greece 9 Balance of cost 

New Zealand S to 10 Balance of cost 

252 



The New York City Fund 

sufficient for any teacher to live upon, and that the men who 
were receiving large salaries ought to have saved enough to 
eke out whatever they received from the city. Indeed that 
the very basis of the whole plan was a refunding to the 
teacher of his or her own contributions was itself made an 
object of attack. The right of all citizens, including teachers, 
to invest their money as they saw fit was repeatedly empha- 
sized. The insurance features of the plan were likewise de- 
nounced as constituting an unjustifiable venture of the city 
into the insurance business. 

Undoubtedly, also, one of the factors of the opposition 
was the general discontent among the teachers because of 
other grievances against the city administration. Side issues 
were brought into the discussion which had nothing to do with 
pensions and which tended further to confuse the minds of 
the teachers. Thus, in one of the leaflets prepared by the 
Teachers' Pension Association, it was pointed out that "the 
city on the plea of economy is denying promotion to nearly 
i,ooo teachers and is keeping several hundred persons from 
appointment to the system. Why do they claim they are will- 
ing to pay so much for pensions?" 

While the bill was before the legislative committees, a 
referendum vote of the teachers was taken which showed 
that ii,ooo were opposed to the measure with 8,000 in its 
favor. The minority, however, urged that in a matter of such 
a technical character the controlling weight should be given 
to the opinion of the actuaries and other experts. 

Shortly before the bill came to a vote the president of the 
board of education, Mr. William G. Willcox, issued a state- 
ment which so admirably summarizes the situation as to war- 
rant reproduction here :^ 

Teachers who are opposing the proposed pension legislation 
are assuming a grave responsibility. Although the measure 
has been approved and endorsed by the pension commission, by 

^Evening Telegram, New York, April 4, 1916. 



Teachers' Pension Systems in the United States 

the city administration, by the unanimous vote of the board of 
education, and by a large majority of the teaching and super- 
vising staff, it is quite possible that an active minority of the 
teachers may defeat it. If so, they will be responsible for 
much hardship and distress among hundreds of teachers who 
have been or should be retired. If the opposition were the 
result of careful study of the measure, it would be less open 
to criticism, but it is apparently based upon misunderstanding 
and ignorance, for as the provisions of the bill are explained 
the opponents rapidly become advocates. 

The measure does not deprive any teacher of a single dollar 
of salary. It does provide for the compulsory saving of about 
five per cent of the salary, but under no circumstances can 
these savings be lost to the teacher. If a teacher dies in the 
service or leaves the service for any cause without retirement, 
the accumulated deductions with four per cent are refunded. 
If a teacher is retired the accumulated savings are doubled 
by the city to provide the stipulated annuity. As the eight 
per cent deduction provided for the teachers nearing the retir- 
ing age may be reduced to five per cent with a corresponding 
reduction in the annuity, no teacher is really compelled to 
save more than five per cent. Even upon actual retirement 
any teacher may elect to decline the annuity and withdraw 
accumulated savings instead. 

Is it, then, unfair or unreasonable that a teacher should 
be obliged to put by five per cent of the annual salary as a 
provision for old age? Certainly everyone dependent upon a 
salary should save as much as five per cent each year, and even 
with this deduction the remaining salary for women teachers 
will be considerably more than they received before the equal 
pay law was passed. If teachers were asked to contribute five 
per cent to pay annuities of other teachers, they might reason- 
ably object, but is any teacher justified in opposing this liberal 
and humane provision for sick and disabled teachers and forc- 
ing the continuance of a situation of misery to these poor 
teachers and of detriment to the schools, merely to avoid sav- 
ing five per cent of his salary, which will be as safe as if 
deposited in a savings bank, and which will be refunded with 
four per cent interest unless he himself elects to use it for his 
own annuity? 

No plan could possibly be devised on which all would agree, 

254 



The New York City Fund 

or which would not cause some inconvenience or perhaps 
hardship in individual cases, but in a situation in which the 
teachers must apparently get together or get nothing the 
minority should seriously consider their position before assum- 
ing responsibility for the defeat of this most liberal and be- 
neficent measure. 

The bill was favorably reported from committee, but, after 
debates attended by much excitement and considerable dis- 
order, failed of passage by four votes. 

The Enactment of the Reorganization Law of 191 7. 

After the defeat of the bill of 1916 the pension commission 
and the teachers' federation took steps together to prepare 
a new bill. After a considerable study a great number of new 
features were added of which the most important were : ( i ) 
a clear distinction between the "annuity" purchased by the 
teachers' contributions and the ''pension" supplied by the city; 
(2) a provision by which a teacher might reduce his contri- 
butions (thereby reducing his "annuity") without reducing 
the "pension" supplied by the city; (3) abolition of direct 
relationship between annuity and salary, thereby preventing 
those who advance rapidly from obtaining greater benefits at 
the expense of those who advance slowly. 

To avert repetition of the accusation that the teachers had 
no opportunity to consider the proposed pension measure, Mr. 
Willcox ordered the teachers to appoint three delegates from 
the schools who were to constitute a central pension com- 
mittee. This committee, consisting of 150 teachers, was to 
"express to the city pension commission the views and criti- 
cisms of the teachers, and to convey to the teachers accurate 
information regarding the provisions of the proposed pension 
plan." 

The teachers' "Committee of 150" was divided between a 
minority which favored the measure, and a majority which 
urged three principal objections to it. The majority urged 
in the first place that the city should not be permitted to 

255 



Teachers' Pension Systems in the United States 

require from the teachers already in the service a contribution 
larger than 3 per cent of salary, but that it should guarantee 
each teacher a half salary benefit. To this the city objected 
on the ground that it would impose upon it an additional 
liability of five million dollars, that it would lead to a similar 
claim on the part of new entrants, and would be against the 
fundamental principle of cooperative division of cost. 

In the second place the majority opposed the city's grant- 
ing pensions above $2,000. This objection was rooted in the 
antagonistic attitude which the lower paid classes usually 
develop towards the higher paid officials. To this the city's 
representatives replied that a pension of $2,000 would not 
be sufficient for the superannuated superintendents, and that 
unless they were to receive a pension proportional to their 
salary, they would have to remain in the service and by so do- 
ing would block promotions and thus prove more harmful to 
the efficiency of service than the continuance of an ordinary 
grade teacher, and that the number of higher pensions would 
be so insignificant as to make almost no difference in the rest 
of the system. 

Thirdly, objection was made that the partial reserve with 
which the system was to begin was inadequate and that the 
growth of necessary budget appropriations would, therefore, 
become so great as to endanger the permanency of the fund. 
In reply to this the city asserted that since the passage of 
the proposed law was requested by the city (thus differing 
from the old law which was enacted at the request of the 
teachers), and since it would voluntarily assume the financial 
obligations involved in it, it was hardly conceivable that any 
future legislature would consent to repeal the law. It was 
also pointed out that the heavy cost of the first few years 
would be due entirely to the initial payments for liabilities 
incurred by past services and after a few years would decline 
rapidly and become normal. 

After a number of conferences, the city refused to make 
256 



The New York City Fund 

concession on any of these points or to further delay the 
matter, and the city's pension bill was accordingly introduced 
at Albany. As the work for which the committee of 150 was 
created was thus completed, the committee disbanded/ 

As soon as the committee disbanded, the majority of the 
committee which was opposed to the city's pension measure 
effected a permanent organization known as the Teachers' 
Interests Organization, the purpose of which for the time 
being was to defeat the city's pension bil- and "to secure 
pension legislation satisfactory to a majority of the teachers." 
Various com^mittees were appointed and a feverish activity 
started, funds were collected, mass meetings arranged, and 
delegations to attend the hearings at Albany appointed. 

The teachers were now as hopelessly divided as the year 
before. The same spirit and substantially the same arguments 
prevailed. The opponents of the bill maintained that no 
pension bill should be passed which did not receive the approval 
of the majority of the teachers. Knowing that the majority 
consisted of younger teachers who were not interested in 
pension measures, except that they were opposed to an 
increase of their contributions, they again demanded that an 
official referendum should be taken among the teachers, the 
results of which should be binding upon the legislature. But 
the legislative committee stated that the results of a teachers 
referendum cannot bind the legislature and that they "will 

^The disbandment of the committee was precipitated by a letter from 
the president of the board of education in which he stated in part : "I must 
confess that I am greatly disappointed in the results of the committee 
as a whole. Not only has it shown little capacity as a whole for con- 
structive work or constructive criticism, but it has failed to assume and 
maintain the impartial and fair-minded attitude which is the first requisite 
for the usefulness and success of such a committee. I have devoted much 
time and effort to a sincere attempt to give the teaching staff fair repre- 
sentation in the consideration of the pension problem and to give the 
committee every opportunity to discharge its trust with credit To itself 
and benefit to the teaching stafT, but the attitude of the committee has not 
been such as to command confidence in its desire or purpose to promote 
a fair and intelligent judgment on the merits of the proposed plan and 
I have reluctantly been forced to the conclusion, therefore, th»t the 
experiment must be considered a failure." 



Teachers' Pension Systems in the United States 

consider the interests of all citizens, and not only the teachers 
in that matter." In view of this opinion the board of educa- 
tion refused to order a new referendum. 

In addition to the arguments already discussed a number 
of others were presented. It was argued that the bill substan- 
tially reduced salaries, as an increase of the teachers' contri- 
butions was tantamount to a reduction of salary; that by 
agreeing to meet the city on the basis of a maximum contribu- 
tion of 3 per cent the teachers were really doing more than 
they should have done, and that a higher increase of their 
contribution was outrageous, especially in view of the fact 
that the cost of living had increased tremendously; that the 
bill made the women contribute at a higher rate, "which is 
inequitable, for it cannot be true that women live longer than 
the men;"^ and that "the policy of arbitrarily subtracting from 
the pay of an employee money for this purpose is unconsti- 
tutional."^ 

At the hearings held by the legislative committees numerous 
associations of taxpayers appeared in opposition to the meas- 
ure. They maintained that it would bankrupt the real estate 
interests, that there was no reason for pensioning teachers, 
and that there was no obligation upon the city to carry even 
the present pension roll. They characterized the measure as 
socialistic. 

After a heated contest the bill passed both houses of the 

'In a letter to the editor of the Globe (April i6, 1914) a school teacher 
wrote in part : "The women are nervous wrecks now (ask any doctor) 
owing to all the new and extra work for years that has been heaped upon 
their shoulders. Who says they'll live longer than better paid rnen 
teachers, under such crushing and overcrowded conditions? Prove it." 

'The president of the Professional Elementary Teachers' Association 
wrote in the Globe of April 5: "The greatest and main objectionis that 
it is applying to an exaggerated degree a principle the constitutionality 
of which is beginning to be seriously questioned. That principle is the 
right of any legislature, civic authority or corporation deliberately to 
take from the salary or wage of any employee any portion of that salary 
or wage for annuity purposes without that employee's consent. I have 
the opinion of a United States senator who states that this policy of 
arbitrarily subtracting from the pay of an employee money for this 
purpose is "unconstitutional." (Globe, April 5.) 

258 



The New York City Fund 

legislature and came before the mayor of the city of New 
York for his acceptance on behalf of the city. He accepted it 
and it then went before the governor. A last desperate 
attempt was made by the opponents of the bill to induce the 
governor to veto it. In this campaign the political opposition 
to the mayor, of which the opponents of the bill had unfortu- 
nately permitted themselves to make use, showed itself more 
clearly than in any of the preceding stages of the contest.^ 
On May i, 191 7, the governor signed the measure and it 
became immediately effective. 

The opposition movement, however, was not silenced by 
this defeat. Its leaders urged the teachers to "allow no one 
on the Retiring Board who did not oppose the bill."^ The 
schools were to elect delegates who, in turn, would elect the 
three members of the retirement board. The opponents suc- 
ceeded in the election of twenty-four of their delegates as 
against twenty-two of the supporters of the act. This slight 
majority was sufficient to give the opponents all three seats 
in the retirement board and to leave the advocates of the meas- 
ure without any representation in the management of the 
system. 

Provisions of the New System. The new system of New 
York City is thus the result of protracted and searching dis- 

^This is well illustrated by the instructions which 200 district dele- 
gates of the Teachers' Interests Organization took to their schools after 
a meeting in the High School of Commerce (April 19th) : 

"i. Do all in your power to prevent the governor's signature from 
being placed upon the bill by means of letters, not only from the teachers 
but from citizens and taxpayers. In these letters state three or four 
specific reasons for opposing the bill. Don't write long letters. 

"2. Members and their friends should call on every politician, every 
person in power that they think can have any weight with the governor. 

"3. Kindly get a petition signed by every teacher, if possible, in your 
school, by every parent or citizen in the neighborhood or in your ac- 
quaintance and send it to the governor. State at the head of this peti- 
tion why you are opposed to the bill, giving five or six definite reasons. 
Chief among these are that the proposed deductions are a reduction in 
salary; that the teachers are given but three of the seven members on 
the board of retirement, and that the bill is an administration measur* 
of the city authorities." 

'Brooklyn Daily Eagle, May 3, 1917. 



Teachers' Pension Systems in the United States 

cussion and of the greatest possible accommodation, through 
necessity, of the conflicting interests involved. But it is the 
fruit also of perhaps the most thorough and painstaking study 
that has yet been applied to the teachers' retirement problem 
in this country. A detailed examination of its provisions, 
therefore, seems desirable. 

Benefits Provided. Membership in the system is com- 
pulsory for all teachers (present teachers and new entrants) 
having a permanent license. Teachers without a permanent 
license may also join the system. 

Retirement is made dependent either upon age (voluntary 
at 65, compulsory at 70) or length of service (35 years) or 
disability. The retirement allowance consists of two parts — 
an "annuity" purchased by the teachers' contributions, and a 
"pension" supplied by the city — and amounts at the full rate 
of contributions to about one-half of the average salary for 
the last ten years. The amount of the allowance varies accord- 
ing to the rate of advancement as determined by different 
methods in the cases of new entrants and of the present 
teachers. 

In case of new entrants, contributions are so graded accord- 
ing to the age and the sex of the contributor as to purchase 
an annuity of about one- fourth of his average salary for the 
last ten years, if he advances at the average rate; slightly 
less, in case of rapid advancement; or slightly more, if he 
advances slowly. The "pension" amounts strictly to one- 
fourth of the average salary. 

In the case of the present teachers, the method of comput- 
ing the annuity is different in that it amounts to less than 
one- fourth of salary, because they have not contributed at the 
new rate during their previous service and cannot, therefore, 
purchase the same annuity as the new entrants. The differ- 
ence is supplied by the city in the form of an additional pen- 
sion of one thirty-fifth of one quarter of the average salary for 
each year of previous service not exceeding 35 years. Thus, in 

260 



The New York City Fund 

their case, too, the total benefit consisting of the annuity, one- 
fourth salary pension and additional one-thirty-fifth pension, 
amounts to about one-half salary in case of the average ad- 
vancement and the full rate of contributions. 

In the event of disability after lo years of service a retire- 
ment benefit is provided v/hich consists of : ( i ) the "annuity" 
purchased by the teachers' contributions; (2) a "pension" 
of one-fifth of the average salary and (3) an additional "pen- 
sion" of one-thirty-fifth of one quarter of the average salary 
for each year of previous service. 

Upon resignation, dismissal or death, all contributions, 
together with compound interest at 4 per cent, are refunded 
to the teacher or to his assigns. If the teacher dies in active 
service after becoming eligible to retirement, a death benefit 
of one-half of the preceding year's salary is paid by the city 
in a lump sum to his estate. 

Among the many excellent features of the system, the pro- 
visions for optional benefits deserve attention, for they make 
it flexible and adaptable to the varying needs of the indi- 
vidual teacher. After becoming eligible for retirement on 
half pay, a teacher still continuing in the service may with- 
draw the annual interest on his accumulations or such part 
of the principal as will not be required to provide him an 
allowance of half -pay on account of a more advanced age 
and consequent reduction in the cost of his annuity. It is 
further provided that any contributor may, upon retirement, 
elect to receive the actuarial equivalent of his pension and 
annuity in any one of the follownig forms : 

1. His regular annuity and pension, or 

2. A reduced benefit with a provision that in case he dies 
before he has received the total value of his annuity and 
pension, the balance shall be paid to his heirs, or assigns, 
or 

3. Reduced benefits covering two lives with a provision that 
upon the death of the teacher the same benefits or one- 
half of such benefits shall be continued throughout the 

261 



Teachers' Pension Systems in the United States 

life of such person as the teacher shall have designated, 
or 
4. Such other form of actuarial equivalent as may be certi- 
fied by the actuary and approved by the retirement board. 

Financing Benefits for New Entrants. In order that 
the system shall operate strictly on a reserve basis, both the 
city and the teachers set aside each year certain percentages 
of salary to special reserve funds, from which the annuities 
and the pensions of the new entrants are eventually to be paid. 
Each teacher has practically an individual savings account 
in the "annuity savings fund" to which his contributions are 
credited. The city on the other hand contributes to a separate 
reserve fund (called "contingent reserve fund") on account 
of those contributors who may retire on superannuation or 
disability. It discounts the number of those among the new 
entrants who will drop out because of resignation, dismissal 
or death before retirement, and it does not contribute on their 
account. 

The rate of contributions of the teachers is not definitely 
fixed by the law. Each new entrant is to contribute (the pro- 
vision being mandatory) such percentage of his salary as 
may be computed by the actuary to be sufficient to purchase 
an annuity of one-fourth average salary. The rates are, there- 
fore, different at each entrance age. The following rates 
taken for certain ages may serve as an illustration : 





Percentage of Salary 


Percentage of Salary 


Age at Entrance 


Contributed by Men 


Contributed by Women 




For Retirement 


For Retirement 




at the Age of 65 


at the Age of 65 


25 


2.85 


3.23 


30 


3-32 


3.79 


35 


4-05 


4.66 



Contributions required for retirement at an earlier age than 
65 are considerably higher. Thus a man teacher entering at 
25, who would elect to contribute towards his half pay pension 
to be payable on the completion of 35 years of service, i. e. at 
the age of 60, will have to contribute at the rate of 4.24 per 
cent instead of 2.85 per cent required for the age of 65. 

262 



The New York City Fund 

Financing Benefits of Present Teachers. The contribu- 
tions of the teachers who were in service at the estabHsh- 
•ment of the system are funded in a similar manner and in 
the same reserve fund ("savings and annuity fund") as the 
contributions of new entrants. An entirely different method 
is, however, provided for the city's contribution. The law 
provides that the city shall : 

1. Appropriate each year on a cash disbursement basis the 
amount needed for the payment of pensions of the retir- 
ing present teachers, and 

2. In addition set aside each year one million dollars as a 
partial reserve against future pension payments to pres- 
ent teachers until the fund as created is equivalent to 
all accumulations of present teachers. 

This partial reserve considerably reduces the future pay- 
ments of the city and thus prevents an excessive growth of the 
burdens of the future generation of taxpayers and safeguards 
the system against sudden attack. 

Funds. Several funds are set up each of which performs 
a distinct function. The "annuity savings fund," in which 
the contributions of the members remain until retirement, per- 
forms the functions of a savings fund, the contributions being 
returned with 4 per cent compound interest to those who 
resign, die or are dismissed. On the date of retirement the 
contributions are transferred to the "annuity reserve fund" 
in which they acquire insurance features, being used to pur- 
chase the annuities of the new entrants. 

The contributions of the city are paid into the so-called 
"contingent reserve fund." From this fund are paid the 
death benefits for "new entrants" provided by the system. 
On the retirement of a teacher, the purchase price of a pen- 
sion, if he or she be a "new entrant," or an amount equal to 
the accumulated contributions paid by him or her, if he or she 
be a "present teacher," is transferred to the so-called "Pension 
Reserve Fund No. i ;" and from this fund the annual pensions 
are paid. 

263 



Teachers' Pension Systems in the United States 

A so-called "Pension Reserve Fund No. 2" is also set up. 
Into this fund were paid, at the establishment of the system, 
all moneys remaining in the old retirement fund. To this 
fund the city adds, as it becomes necessary, the moneys needed 
to pay the pensions to those already on the pension roll at the 
time of the establishment of the system, and also such part 
of the pensions of "present teachers" as are not paid out of 
"Pension Reserve Fund No. i," The payment of death- 
benefits to "present teachers," and the refund to such teachers, 
in case of dismissal, of the contributions made by them under 
the old system, are also paid out of this fund. Except for the 
comparatively minor amount received from the old fund, 
this "Pension Reserve Fund No. 2" is not in reality a reserve 
fund so much as an appropriation account. 

Under the head of "Expense Fund" account is kept of the 
moneys annually appropriated by the cit}^ to defray the 
expenses of the administration of the fund. 

Management. The management of the system is in a 
board of seven members, of whom three are elected by the 
teachers, three (the comptroller and two members appointed 
by the mayor) represent the city, and the seventh is the presi- 
dent of the board of education. All these members serve 
without compensation. They may employ a secretary, an 
actuary and such medical, clerical and other staff as is neces- 
sary, and fix their compensation. 

Actuarial Valuations. The law provides that the first 
actuarial investigation of the mortality and service experience 
and the first valuation of the fund shall be made in 1919, two 
years after the establishment of the system; the second, three 
years after the first, and that investigation be made every five 
years thereafter. On the basis of these investigations the 
retirement board shall (i) adopt such mortality and other 
tables as shall be necessary; (2) certify the rates of con- 
tributions necessary to pay the annuities provided in the bill, 
and (3) certify the rates of the city's contributions with 
respect to new entrants. 

264 



CHAPTER XVII 
THE PENNSYLVANIA SYSTEM 

Soon after the years 1894-1896, when retirement laws for 
teachers were passed by the legislatures of New York, New 
Jersey, Illinois and Ohio, a movement developed among the 
teachers of Pennsylvania in favor of obtaining retirement 
legislation. The teachers of Philadelphia took the leading 
part in this movement. The result was that in the year 1905 
a provision was added to the school law allowing any city of 
the first class (in reality only the city of Philadelphia) to 
establish a retirement fund. The wording of this provision 
was very brief and indefinite. The fund was to consist *'of 
all funds available for like purposes at the time of enactment 
of this law, together with such additions thereto as the Board 
may from time to time prescribe, and such money as may 
be donated or bequeathed for such purposes." 

No rules were set as to the conditions under which retire- 
ment could take place and the amount of annuity which 
should be granted. It was simply provided that "any teacher, 
principal or supervising official retired by the Board of Public 
Education shall receive from the Board such an annuity as 
the Board of Education shall prescribe." 

Under this law the Philadelphia fund, the first teachers' 
retirement fund in Pennsylvania, was established. Its rules 
and by-laws were formulated and approved by the local board 
of education. 

As the teachers in other cities of the state were anxious 
to have a similar retirement fund, the law was amended in 
1907 extending the permission to establish retirement funds 

265 



Teachers' Pension Systems in the United States 

to the cities of second and third classes. The wording of 
the law remained substantially the same. 

Under this amendment Harrisburg established a retirement 
fund in 1908, and Wilkes-Barre in 19 10. 

In 191 1 a further amendment was enacted extending the 
application of the law to "any school district" and specifically 
providing that any board of education might contribute to 
the fund and also "provide in the contract with its teachers 
that they shall contribute a reasonable sum from their salaries 
each year" and that "where the teachers contribute to any 
retirement fund they shall be represented in making the regu- 
lations governing it, and its control and management." 

During the five years following the passage of this act the 
following seven cities established retirement funds : 
Scranton in 191 1 



Pittsburgh 
Altoona . . 
Chester . . 
Reading . . 
Lancaster 
Erie 



1912 
1913 
1913 
1913 
1914 
1916 



To many leaders of the pension movement the results of 
the permissive legislation seemed disappointing. They real- 
ized that the hundreds of small localities might never take any 
action in the matter of making retirement provisions for their 
teachers, and they urged that the state step in, take the retire- 
ment question out of the jurisdiction of the localities and estab- 
lish one state-wide and state-administered system covering 
all the teachers in the state. 

There was, however, wide disagreement as to the extent 
to which the state should go into the matter. The State 
Teachers' League took the extreme position that the state 
should bear the entire cost of the system and relieve the 
teachers of any obligation to save towards their future; and 
that the entire control of the system be vested in the state 
superintendent of schools. The league accordingly framed 
a bill in 1907 providing that any teacher who had taught for 

266 



The Pennsylvania System 

30 years, 20 years of which had been in Pennsylvania schools, 
should receive from the state an annuity of one-half of his 
average salary for the last five years, with a minimum of $200 
and a maximum of $600. No special fund was to be set aside 
for this purpose. Each year an appropriation was to be made 
of the sum necessary to meet the annuity requirements of 
that year. The bill met with strong opposition and failed 
to pass. 

The State Educational Association went to the other ex- 
treme and supported the principle that the teachers should 
bear the entire cost of the system. It prepared a bill provid- 
ing for the establishment of a retirement fund supported by 
teachers' contributions and administered by a board consisting 
of five members appointed by the state superintendent of 
schools, of whom one was to be a classroom teacher, one a 
county or district superintendent and two not teachers. The 
contributions were to diminish with longer service from 4 per 
cent of salary at the outset to i per cent during the final period. 
Any teacher who reached the age of 60 and completed 30 years 
of service could retire on a pension of one-sixth of the average 
monthly salary of the teacher, multiplied by the number of 
years he had served. Disability pensions were provided and 
the contributions were to be returned in cases of resignation. 

The bill was introduced in the legislature in 191 5 and was 
widely discussed. Objection was made that it imposed upon 
the teacher a disproportionately heavy charge during the 
beginning of her career when she was the least able and 
willing to make provisions for the future and reduced her 
burdens during later periods when her salary and foresight 
have usually increased. The rate of contributions was not 
based on any actuarial calculations and was inadequate. The 
tenth annual report of the Carnegie Foundation of Teaching 
said about the bill : 

The bill encountered much opposition; the teachers in the 
small systems objected to the burden of the contribution, 

267 



Teachers' Pension Systems in the United States 

which was not offset by contributions from the state; the 
teachers in the larger systems were opposed to a scheme that 
would deprive them of the benefits of existing arrangements 
in which the contributions were not so high, the employing 
authority supported the fund, and some assets had already 
been accumulated. The chief weakness of the measure was 
the inadequate financing, since no teacher would have been 
required to contribute more than $592 on a basis of eight 
contributions per year, — a deficiency which no amount of 
complicated regulations could set right. The measure might 
perhaps have been assured of earlier success if its advocates 
had come forward with a definite and straightforward request 
for state aid instead of urging a scheme which could have 
been saved from early insolvency only by a subsequent appeal 
to the state. Too much is at the stake when upwards of 40,000 
teachers are involved, to indulge in experiments, even iif they 
are intended merely as entering wedges for proving the need 
of state support. 

The bill failed to pass. There then developed a tendency 
to find some middle ground between the two extreme ideas 
which had been defeated. The two associations which had 
hitherto disagreed so sharply came to agreement. A joint 
commiittee was appointed which entrusted to the actuary of 
the New York City Commission on Pensions the work of pre- 
paring an actuarial system. 

The fact that the new system was to be introduced where 
there was no system before, permitted its framers to include 
in it many progressive features, the inclusion of which in 
the New York City system had been successfully opposed by 
those who claimed to have "vested rights" in the unsound 
.provisions which had been previously enacted. 

The work was completed in the course of a few months 
and the bill was presented to the legislature early in the ses- 
sion of 19 1 7. An able propaganda explaining the funda- 
mental principles of the bill was conducted by the committee 
of the two associations and an intelligent public discussion 
of the bill was obtained with the result that the support of 
the majority of the teachers and legislators was secured. The 

268 



The Pennsylvania System 

school employees, to whom the bill originally did not apply, 
addressed a petition that they be included in it. Their request 
was granted and the name of the proposed fund was changed 
from Teachers Retirement Association, to School Employees 
Retirement Association. The bill passed both houses, meet- 
ing very little opposition, was signed by the governor and 
became a law on July i8, 1917.^ 

Benefits. Membership in the new system is compulsory 
for all persons entering the service after the date of enactment. 
Teachers already in the service are given until July i, 19 19 
to elect whether or not to enter. 

Retirement takes place on the basis of age, not length of 
service. Any person who has reached 62 years of age may 
retire regardless of his or her length of service. This feature 
of the system prevents the early retirements which are possible 
under the provision of the New York City system, which 
allows retirement after 35 years of service, regardless of age, 
and which, as has been shown, was there adopted for the sole 
purpose of effecting a compromise with the teachers who 
otherwise would have blocked the passage of the bill. 

Retirement is made compulsory at 70. The superannua- 
tion benefit is fixed at the rate of one-eightieth of the average 
salary for the last ten years for each year of service (with 
a maximum of 50 per cent of the final salary), whereas in 
the New York City system it is fixed at one-seventieth. The 
lower scale of benefits reduces the cost to the teachers as 
well as to the state. 

The benefit consists of two parts : one for "subsequent serv- 
ice" rendered after the establishment of the system, and 
the other for "prior service." The first divides itself into 
two equal parts, one purchased by the employee's contribu- 
tions, and called "employee's annuity" and the other provided 
by the state's contribution and called "state annuity." Each 

^Pennsylvania, Acts, 1917. No. 343. July 18, 1917. 
269 



Teachers' Pension Systems in the United States 

is fixed at one one-hundred-sixtieth of the average salary 
multipHed by the number of years of subsequent service. The 
benefit for "prior service" is provided entirely at the expense 
of the state and is called "additional state annuity." It is 
fixed at the rate of one-eightieth of the average salary for the 
last ten years multiplied by the number of years of prior 
service. 

Disability Benefit. Any person who, after lo or more 
years of service and before reaching the age of 62, has 
become disabled, receives a disability allowance of one-nine- 
tieth of his average salary for the last ten years multiplied by 
the number of years of service. The benefit must be neither 
less than 30 per cent of salary nor more than eight-ninths of 
the benefit to which the person would have been entitled had 
he or she continued in the service until the age of 62. Once 
each year the retirement board may require the disability 
annuitant to submit to a medical reexamination. Should the 
annuitant while under the age of 62 refuse to be reexamined 
or should it be found that he is no longer disabled, the board 
may discontinue his state annuity. In case the disability 
annuitant is engaged in another gainful occupation the board 
may refuse his state annuity. Should a disability annuitant 
recover and be restored to school service, his retirement allow- 
ance ceases and his rate of contribution is the same as before 
disability. 

Death Benefit. In the case of death before retirement 
the dependents of the deceased received the employee's con- 
tributions with compound interest at 4 per cent. With regard 
to death after retirement the provisions are similar to those 
in New York. The employee may at the time of his retire- 
ment choose a smaller allowance with the agreement that 
the balance shall be paid to his dependent or assignee in the 
form of either a lump sum or further annuity. 

Any employee who resigns or is dismissed before retire- 
ment receives back all his contributions together with 4 per 
cent compound interest. 



The Pennsylvania System 

Teachers' Contributions. Each teacher contributes a cer- 
tain percentage of his salary according to his age at the time 
of becoming a member of the system. The rate of contribu- 
tion is so fixed as to provide at the age of 62 an annuity of one 
one-hundred-sixtieth of the average salary for each year of 
subsequent service. In view of the fact that all contributions 
are calculated to the same retirement age instead of as in 
New York to different ages according to length of service. 
the sam:€ contribution obtains for all teachers of the same age 
irrespective of whether they have previous service to their 
credit or have just entered the service. The scale of con- 
tributions, which is shown on the following page, contains, 
therefore, only about eighty-six different rates (two for each 
age, one being for men and the other for women), whereas 
the New York City scale of contributions contains about 2,000 
different rates. The difficulties which the members of the New 
York City systems frequently experience in having to select be- 
tween a number of different rates, the arrangement of which 
they do not understand, is hereby avoided, and the task of 
keeping records is simplified. 

Contributions are never required on any portion of a salary 
in excess of $2,000. The older entrants whose regular rate 
of contribution exceeds 5 per cent may lower it to 5 per cent, 
thereby either reducing their annuity or postponing the date 
of their retirement. Such a lowering of their rate does not 
affect their state annuity. In this respect the Pennsylvania 
system is also in advance of the New York City system which 
allows the members to reduce their contributions as low as 3 
per cent and thereby greatly reduce their future benefits. 

State Contribution. The state contributes on a full re- 
serve basis on account of all past and future services of all 
its members, whereas in New York the city contributes on a 
full reserve basis only on account of new entrants, the partial 
reserve basis being adopted for present teachers. It con- 
tributes semi-annually 2.8 per cent of the annual salaries, and 

271 
r 

I; 

t: 
\ 



Teachers' Pension Systems in the United States 

each semi-annual payment must be at least 3 per cent higher 
than the second preceding semi-annual payment. This con- 
tribution will create a sufficient reserve in less than forty years, 



Scale of Employees' Contributions in the Pennsylvania Fund 





Percentage 


OF Salary 




Percentage of Salary 




Required I 


N Case Of 




Required In Case Of 


Age 






Age 






Men 


Women 




Men 


Women 


18 


3.33 


3.69 


40 


3.74 


4.45 


19 


3.33 


3.71 


41 


3.79 


4.52 


20 


3.33 


3.74 


42 


3.84 


4.59 


21 


3.33 


3.75 


43 


3.89 


4.67 


22 


3.34 


3.78 


44 


3.95 


4.75 


23 


3.34 


3.79 


45 


4.01 


4.83 


24 


3.34 


3.81 


46 


4.07 


4.92 


25 


3.35 


3.83 


47 


4.14 


5.01 


26 


3.36 


3.85 


48 


4.20 


5.10 


27 


3.37 


3.88 


49 


4.27 


5.20 


28 


3.38 


3.90 


50 


4.34 


5.29 


29 


3.40 


3.93 


51 


4.41 


5.40 


30 


3.42 


3.96 


52 


4.49 


5.50 


31 


3.44 


4.00 


53 


4.57 


5.61 


32 


3.46 


4.03 


54 


4.64 


5.72 


33 


3.49 


4.07 


55 


4.73 


5.83 


34 


3.51 


4.11 


56 


4.81 


5.94 


35 


3.55 


4.16 


57 


4.90 


6.07 


36 


3.58 


4.21 


58 


4.98 


6.18 


37 


3.62 


4.27 


59 


5.08 . 


6.31 


38 


3.65 


4.32 


60 


5.16 


6.42 


39 


3.70 


4.38 


61 


5.30 


6.59 



and can then be discontinued. It will liquidate the accrued 
liabilities in a much shorter space of time than will the partial 
reserve contribution of New York City. 

Reimbursement. The state is reimbursed by the localities 
to the extent of one-half of the contribution which it makes 
on account of the teachers that they employ. The purpose 
of this arrangement is to interest the local employing body in 
the welfare of their employees and to equitably distribute the 
cost. The reimbursement is deducted from the funds which 
it apportions for school purposes. 

Valuation. It is estimated that the total liabilities on 
272 



The Pennsylvania System 

account of present employees amount to about $61,000,000, 
of which $23,000,000 will be contributed by the teachers and 
$38,000,000 by the state and by the localities. The annual 
appropriation on account of present employees now amounts 
to about $1,500,000. The appropriation on account of new 
entrants, which is fixed at 2.75 per cent of salaries, during 
the first year amounts to about $25,000 and will increase each 
year thereafter at least by that amount. Actuarial valuations 
are to be made in 1919, 1921, 1924 and every fifth year there- 
after. 

Management. The system is managed by a retirement 
board of seven members. The superintendent of public 
instruction, the state treasurer and one member appointed by 
the governor represent the state. Three members are elected 
by the teachers, and the seventh member is elected by the six. 
The system is subject to the supervision of the state depart- 
ment of insurance. 

Relation to Local Funds. The law allows any existing 
local retirement fund to merge with the state fund if two- 
thirds of the members of the local fund apply for member- 
ship in the state fund "by a petition duly signed, verified and 
approved by their employer." In that case the local system 
is discontinued and dissolved as follows : The members cease 
to contribute to the old system and begin to contribute to the 
state fund in accordance with their age; all the assets of the 
fund are held by the locality as a trust fund and are applied 
to the payment of the benefits to the teachers already retired, 
which payment becomes an obligation of the locality. In case 
the contributor upon his transfer does not receive back the 
contributions which he or she has made to the discontinued 
system, the amount of such contributions is to be contributed 
by the state at the time of his retirement and to purchase for 
him an additional annuity or such other benefit as he may 
elect, over and above the benefits provided by the act. 

273 



CHAPTER XVIII 

THE SCIENTIFIC PENSION LAWS OF 1919: NEW 
JERSEY, OHIO AND VERMONT 

During the year 19 19 three new scientifically constructed 
pension laws were placed on the statute books, thus bringing 
the total number of scientific pension laws to seven. These 
were : New Jersey, Ohio and Vermont. They differ in several 
respects from the systems of Massachusetts, Connecticut, New- 
York City and Pennsylvania and deserve to be studied in de- 
tail. The text of these laws will be found in Appendix 3. 

New Jersey. The investigation of the teachers' retirement 
situation in New Jersey conducted by the Pierson Commis- 
sion with the assistance of the Bureau of State Research and 
described in chapter XII, culminated in the preparation and 
introduction in the legislature of three bills providing for a 
complete reorganization of the old retirement systems. They 
were passed by the legislature and enacted on April 10, 19 19. 

The most important of the three new laws (ch. 80) estab- 
lished a new retirement system, with joint contributions on 
an actuarial basis, which will gradually supersede the old 
double system. The second law (ch. 81) amended the teach- 
ers' retirement fund act by allowing the members of the fund 
to withdraw from it and absolving future teachers from any 
obligation to belong to it, in view of its insolvency. The third 
law (ch. 82) repealed the 35 year service pension act. 

The reorganization effected under these laws is very dif- 
ferent from the reorganization effected in New York City. 
Instead of liquidating the old system at one stroke and taking 
over at once all its assets and liabilities and its entire member- 
ship by means of compulsion as New York City did, New Jer- 

274 



New Jersey, Ohio and Vermont 

sey allowed its old fund to continue to exist, only in a greatly 
reduced scope and under the condition that it gradually wind 
up its affairs, and it made withdrawal from it and entrance 
into the new fund entirely optional. This gradual liquidation 
was dictated by considerations of expediency rather than 
scientific preference. 

Membership in the new system is compulsory for all new 
appointees but optional for teachers now in the service. The 
benefits provided by the system are as follows : 

1. A superannuation allowance on or after the attainment 
of the age of 62 of approximately i/70th of the average salary 
of the last five years multiplied by the number of years of 
teaching service (up to 10 years of service in public schools 
of other states included) minimum $400. The allowance 
consists of a pension of i/i40th of the average salary of last 
5 years preceding retirement for each year of subsequent 
service and i/70th for each year of prior service; and of an 
annuity of such amount as the contributions of the member 
will provide at the time of his retirement, on the basis of a 
mortality experience similar to that obtained in New York 
City and interest compounded at 4 per cent. 

2. A disability allowance at any time before the attainment 
of the age of 62, provided the teacher has served 10 years in 
the state, of i/70th of the average salary multiplied by the 
number of years of service (including up to 10 years service 
rendered in public schools of other states), minimum 30 per 
cent of salary, or $300. 

3. An additional annuity to the former members of the re- 
tirement fund of such amount as their contributions to the old 
fund without interest will provide. 

4. In case of resignation or dismissal before retirement, a 
refund to the teacher of all contributions together with interest 
at 3>4 per cent. 

5. In case of death before r.etirement, a return to the 
teacher's legal representatives of all his contributions together 
with interest at 3^ per cent. 

6. Optional benefits as follows : a teacher may select at the 
time of retirement to convert the total reserve placed to his 
account into a smaller annual allowance with the provision 

275 



Teachers' Pension Systems in the United States 

that the balance shall be paid on his death to any person whom 
he may designate, in the form of a lump sum or a life annuity. 

The state will cover the total cost of the benefits for a prior 
service of present entrants (the accrued liabilities) and half of 
the cost of their benefits for future service. The annual con- 
tribution on that account will amount to 5.02 per cent of the 
total payroll of all members. It will have to be made for ap- 
proximately 30 years when the entire obligation on account of 
the present members will be liquidated. On account of all 
new entrants the state will contribute a certain percentage 
of salary graduated according to the age of the entrant 
from 2 per cent up. The number of withdrawals from the 
service have been discounted so that the state contributes 
only on account of that number of members which will actually 
remain in the service and no part of its contributions will re- 
vert to it in cases of withdrawal. 

In addition to this obligation, the state has assumed consid- 
erable liabilities in connection with the two old retirement 
systems. It took over the entire pension roll and such part 
of the annuity roll, (i. e. at least 80 per cent of it), as the re- 
tirement fund will be unable to pay. The liability thus taken 
over on account of the teachers already retired was estimated 
as of June 30, 1918 — at $4,300,000. It was greater on Sep- 
tember of the following year when the new system became 
effective. 

The state assumed the entire cost of the guarantee of the 
rate of interest at 4 per cent and of the minimum allowance, 
and practically the entire cost of administration. In cases of 
withdrawal the difference between interest at 3 ^ per cent and 
the guaranteed rate of 4 per cent is applied to meet part of 
the cost of administration. The part so covered will be more 
or less insignificant. 

The total obligations assumed by the state under the new 
system amount to approximately $24,000,000, which is to be 
divided as between different benefits approximately as follows : 

276 



New Jersey, Ohio and Vermont 

Pensions and annuities already outstanding $ 4,000,000 

Superannuation allowances ($8,800,000 for prior 

service and $5,300,000, for future service) . . . 14,100,000 

Disability allowances 5,300,ot)0 

Additional annuities in compensation of contribu- 
tions made to the old retirement fund 300,000 



The members contribute, according to their age, such a per- 
centage of their salaries as will provide them at the age of 62 
(assuming average advancement of salary) with an annuity of 
one one-hundred- fortieth of their average salary of the last 5 
years preceding retirement. Any teacher who has reached 
62 years of age and has completed 35 years of service may 
cease to contribute. The rates of contributions are as fol- 
lows: 



AGE 


MEN 


WOMEN 


T ENTRANCE INTO 


(percentage 


(percentage 


THE NEW FUND 


OF salary) 


OF salary) 


20 


3.60 


391 


21 


3-60 


3-93 


22. 


3.60 


3-95 


23 


3.61 


3-98 


24 


3-62 


4.01 


25 


3-62 


4-05 


26 


3-64 


4.09 


27 


3.66 


4.13 


28 


3-69 


4.18 


29 


372 


4-25 


30 


376 


4-32 


31 


3.80 


4-39 


32 


3-84 


4.46 


33 


3-89 


4-53 


34 


3-93 


4.60 


35 


3-97 


4.68 


36 


4.01 


475 


37 


4.07 


4.84 


38 


4-13 


4-94 


39 


4.19 


5-04 



277 



Teachers' Pension Systems in the United States 

WOMEN 

(percentage 

OF salary) 

5-13 

5.22 

5-32 

542 

5-53 
5-63 
5-73 
5-83 
5-93 
6.04 
6.16 
6.27 
6.38 
6.49 
6.60 
671 
6.83 
6.94 

705 
7.17 
7.29 

The average contribution of the member will be 4 per cent. 
The state will contribute approximately 8^ per cent of the 
salaries (including the accrued liabilities and the existing re- 
tired roll) i. e., more than twice the amount contributed by the 
teachers. It will have to increase its annual contribution from 
approximately $230,000 (the amount of the pension roll) to 
about $1,250,000 i. e. to more than five times the previous 
amount. Of the total contributions which the present teachers 
will pay into the fund in the future only $6,300,000, will be 
applied to the purchase of superannuation and disabiHty an- 
nuities. The major part of their contributions will never 
be anything but mere savings accounts which will be with- 
drawn before retirement. 

Every five years actuarial valuations are provided at which 
278 



AGE 


men 


t entrance into 


(percentage 


THE NEW FUND 


OF salary) 


40 


4.26 


41 


4-33 


42 


4.40 


43 


4-47 


44 


4-54 


45 


4.61 


46 


4.68 


47 


4.76 


48 


4.84 


49 


4.92 


50 


5.01 


51 


5.10 


52 


5-19 


53 


5.28 


54 


5-37 


55 


546 


56 


5-56 


57 


5-67 


58 


578 


59 


5-89 


60 


6.00 



New Jersey, Ohio and Vermont 

the rates of contributions of the state as well as of the mem- 
bers can be either increased or reduced according to the results 
of the investigations of the mortality, service, and salary ex- 
perience. 

The system consists of six funds : the annuity savings fund 
and the annuity reserve fund for the members' contributions : 
the pension fund for the state's contribution for present active 
and retired teachers; the pension accumulation fund and the 
pension reserve fund for the state's contribution on account of 
new entrants; and the expense fund. The pension accumula- 
tion fund corresponds to the contingent reserve fund of the 
New York City and Pennsylvania systems. The term is more 
explicit, as it indicates that in this fund the reserves for the 
payment of pensions are accumulated. 

The board of trustees consists of seven members : the com- 
missioner of education, the state treasurer, one member ap- 
pointed by the governor, three members elected by the members 
of the fund, and the seventh member elected by the six. 

Noteworthy is the fact that in preparing this legislative 
measure the commission carefully sounded the opinions of the 
teachers. It gave a wide publicity to its proposals, carefully 
examined all the criticisms which they evoked and incorpor- 
ated in the bill any reasonable suggestion that was advanced. 

Originally the bill based retirement allowances on the av- 
erage salary of the last ten-year period preceding retirement, 
as the latter afforded a more stable basis for the financing of 
the system and a more equitable one than an average taken 
throughout a shorter period. But the teachers urged the five- 
year basis in order that the pension of the teachers about to 
retire should not be smaller than the one provided under the 
old pension law. The commission yielded on this point, al- 
though it considerably increased the cost to the state. 

The disability allowances were originally fixed at the one- 
seventy-fifth rate, but the commission changed it to the one- 
seventieth rate, same as superannuation allowances because the 

2/9 



Teachers' Pension Systems in the United States 

superannuation age was fixed rather high and under such 
conditions disability benefits would naturally assume a con- 
siderable importance. In this way a teacher who became dis- 
abled at 57 after 35 years of service could retire on half pay. 

Credit for outside service up to 10 years was incorporated 
in response to the demand of some teachers. In the case of 
present teachers the credit is provided entirely at the expense 
of the state. In the case of new entrants the cost of it was 
to be divided between the teacher and the state on a 50-50 
basis; the teacher was allowed to pay the contributions for 
the years of outside service for which he claimed credit, either 
in a lump sum (which he could easily do if he transferred 
from a system which refunded to him his contributions) or by 
means of annual instalments. 

The interest rate in case of withdrawals was fixed at 3^ 
per cent as a compromise between the 3 per cent rate ori- 
ginally provided in the bill and the 4 per cent urged by the 
teachers. 

The prior service credit was made renewable in case a 
teacher left the service and subsequently returned. 

The minimum of $400 for superannuation and $300 for 
disability was included because the teachers asked that some 
minimum be fixed. It was important in view of the small 
salaries in rural districts. 

The guarantee of all benefits already granted was added 
when the bill was before the legislature. It was strongly 
urged by the teachers. Originally the bill guaranteed all 
pensions, but the annuities only in case of those who did not 
receive the pension; double beneficiaries would have suffered 
a reduction in their total benefit. Now they were guaran- 
teed all that they received theretofore, even though the com- 
bined benefit often exceeded 100 per cent of their salary. 

The only point urged by the teachers which the commission 
refused to concede was that the present teachers should be 
allowed to retire on half-pay after 35 years of service, irre- 

280 



New Jersey, Ohio and Vermont 

spective of age. The teachers argued that they had this 
right under the existing law, and that it was not fair to take it 
away from them, and that it would not cost much as com- 
paratively few would avail themselves of it. The commission 
replied that this right of the old law was against public policy 
as it allowed efficient teachers who were but 51 years of age 
to retire, and that it would add approximately $3,000,000 to 
the burdens of the state. There was considerable agitation 
on this point among the teachers and efforts were made to 
amend the bill in spite of the commission, but these efforts 
failed. The bill passed both houses without this amendment 
and was signed by the governor. 

The enactment of this law closed, with a comparatively 
happy solution, the pension controversy which raged for 
more than 20 years in this state. 

The new law compares very favorably with the laws gov- 
erning other scientific systems. It provides larger benefits 
and adjusts the problem of the lower paid teachers in a more 
satisfactory way than some of the others do. It also presents 
a considerable advance so far as legislative drafting is con- 
cerned. It is built in accord with the real anatomy of a pen- 
sion system. It consists of large divisions arranged in logical 
order. Each division consists of sections, which are grouped 
under proper subheads and each of which presents a complete 
thought and can be easily referred to and, if necessary, 
amended without disturbing the other parts of the structure. 
The skeleton of the law is as follows: 

1. Definitions. 

2. Establishment of System. 

3. Membership. 

4. Service Creditable. 

5. Benefits. 

Superannuations. 
Disability. 

Withdrawal and Death Benefits. 
Optional Benefits. 
Benefits of Teachers now Retired. 
281 



Teachers' Pension Systems in the United States 

6. Actuarial Basis. 

7. Funds Created. Contributions Thereto and Payments 

Therefrom. 
Funds Derived from Members' Contributions. 
Funds Derived from Employers' Contributions. 

8. Collection of Contributions. 

Collection of Members' Contributions. 
Collection of Employers' Contributions. 

9. Administration. ' 

Board of Trustees. 

Administrative Staff and Procedure. 

Management of Funds. 

10. Other Provisions. 

State Supervision. 
Exemption from Taxation. 
Protection against Fraud. 
Repealer. 

Ohio. As early as 1896 a pension law for teachers was en- 
acted in Ohio. It applied only to first class cities. Subsequent 
amendments (1900, 1902, 1904 and 191 1) extended it to other 
cities, increased the salary deductions to $2 monthly and al- 
lowed the cities to contribute up to 2 per cent of the school 
taxes. All these laws were of permissive character. Only the 
larger cities and a few of the smaller ones availed themselves 
of the permission to establish retirement funds. The revenues 
provided were insufficient to finance the funds on a permanent 
basis. The collapse of pension funds in other states and their 
reorganization on a sound basis helped to call the attention of 
the leading teachers of Ohio to the shortcomings of their own 
system and the need of its reorganization. A movement was 
started and an organization formed which, with the assistance 
of experts, framed a bill providing for the establishment of a 
new state-wide pension system on an actuarial basis. The bill 
passed the legislature and became a law in May, 19 19. 

The new system differs in several respects from the New 
York City, Pennsylvania and other recently enacted systems. 
All present teachers, who do not belong to a local pension fund, 

282 



New Jersey^ Ohio and Vermont 

who do not notify their employing board that they desire to be 
exempted from membership in it, become members of it. This 
feature is different from the compulsory feature of the New 
York City system which allows no one to stay out of the system 
as well as from the optional feature of systems which admit 
only those present teachers who apply for membership. Under 
the latter arrangement many teachers remain outside of the 
system not because they do not want to join but because they 
cannot make up their mind and take a definite action. Under 
the Ohio arrangement a large proportion of them would drift 
into the system, not because they would desire to join but be- 
cause they would hesitate or otherwise fail to apply for exemp- 
tion. As a further measure designed to increase the member- 
ship of the system it is provided, that "each teacher shall be 
deemed to be a member of the retirement system and shall have 
the right to vote" at the first election of the members of the 
board of trustees and "any teacher in a local district pension 
system who exercises such right to vote shall be deemed to have 
petitioned for a merger with the state teachers' retirement 
system." 

A teacher may retire at the age of 60. Power is given to 
the board to retire him on the request of his employing board, 
as in other systems. On retirement he is entitled to : 

(a) Such an annuity as his contribution of 4 per cent of 
salary (all members contribute at the same rate irrespective 
of their age or sex) will provide; 

(b) a pension from the state of an amount equal to the 
annuity and 

(c) an additional pension, if the teacher is a present 
teacher, of i 1/3 per cent of his average salary of last 10 years 
multiplied by the number of years of prior service. Optional 
retirement is provided after 36 years of service irrespective of 
age, but only on an actuarial equivalent of his benefit at that 
time, i.e. usually on a greatly reduced benefit. 

In order that the retirement allowances in rural districts 
283 



Teachers' Pension Systems in the United States 

might not fall below the level of subsistence, it is provided that 
no teacher retiring after 36 or more years of service shall re- 
ceive less than $25 per month and that in no case shall the re- 
tirement allowance of a teacher who was a member of a local 
pension fund at the time of the enactment of the new law be 
less than the amount which he would have received under the 
provisions of the local fund. 

The retirement allowances produced are, especially in the 
case of new entrants, smaller than 'the retirement allowances 
of either the New York City or New Jersey systems. In the 
case of women teachers and especially those entering the service 
at a late age the allowances reach a rather low level, (even 
lower than in Pennsylvania) as may be seen from the follow- 
ing table. The system would have been much more equitable 
and efficient had the rates of contributions been graduated ac- 
cording to age and sex, instead of being fixed at the same 
flat rate for all, irrespective of their different status. 

Retirement allowances expressed as percentages of 
the average salary of last 10 years in case of new en- 
trants entering at various ages and retiring at 60 (the 
allowance consists of an annuity provided by a con- 
tribution OF 4 per cent of salary and of a pension of 
an equivalent amount). 

Percentage Allowable to 
Age of Entrance 



20 
21 

22 

23 
24 

25 
26 
27 
28 
29 
30 



Men Teachers 


Women Teachers 


Per Cent 


Per Cent 


59-94 


50.33 


57-65 


48.80 


56.20 


47.00 


54-65 


45-70 


53-25 


44.20 


51-72 


42.82 


50.00 


41.20 


48.25 


39-75 


46.55 


38.35 


44.80 


36.85 


42.81 


35-09 


284 





New Jersey, Ohio and Vermont 

Retirement Allowances (Continued) 

31 41-00 33.55 

32 39-35 32-00 

33 37-50 30.50 

34 35-85 29.00 

35 33-76 27.50 

36 32.20 26.00 
Z7 30.45 24.75 

38 28.55 23.25 

39 26.90 21.95 

40 25.17 20.41 

41 23.50 19.20 

42 21.90 17-90 

43 20.30 16.50 

44 18.75 15-30 

45 17-38 14-07 

It must be noted that the contributioins are made on the basis 
of a salary not exceeding $2,000. The higher paid teachers 
and school officials will therefore receive allowances of smaller 
proportion to their salary than others. 

In case of disability after 10 years of service, the teacher is 
entitled to a retirement allowance, including his annuity and 
pension of 1/5 per cent of his average salary of the last 10 
years for each year of service, with a minimum of 30 per cent 
of salary, and a maximum of 90 per cent of the retirement 
allowance to which he would have been entitled at 60. A 
teacher retiring at 50 or 55 years of age after 30 years of ser- 
vice will be entitled to a disability allowance of 36 per cent of 
his salary. On retiring after 35 years of service he will re- 
ceive 42 per cent. 

A credit for service rendered in public schools of other 
states is allowed only to present teachers and only on condition 
that the teacher cover the entire cost of such credit. When a 
present teacher leaves the service, his prior-service certificate 
becomes void and not renewable. Both of these features are 
open to criticism. The provisions of the New Jersey systems 
are more satisfactory in this respect. 

285 



Teachers' Pension Systems in the United States 

In cases of resignation or dismissal the teacher or his repre- 
sentatives are to receive all his contributions with interest at 
4 per cent ten years after the resignation or dismissal. This 
deferred refund is a novel feature. In the absence of any ex- 
perience with this feature it is difficult to say whether or not it 
is practicable and will satisfy the teachers. 

In cases of death before retirement the teachers' contribu- 
tions with interest are paid to his legal representatives at any 
time. Optional benefits similar to those of other systems are 
provided. 

The body employing the teacher pays each year on account 
of each teacher a certain "normal contribution" which is fixed 
at such a percentage of salary as will provide the teacher with 
a pension equal to his annuity, and a certain "deficiency con- 
tribution" also expressed as a percentage of salary to cover 
on a reserve basis the accrued liabilities of the system. The 
immediate cost to the employers will be approximately 5.6 
per cent of salary (2.8 per cent normal contribution and 2.77 
per cent deficiency contribution). 

The total assets and liabilities of the system are as follows. 

liabilities assets 

Superannuation Teachers' Contri- 

Allowances for butions $13,360,924 

future service. .$14,750,336 Employers' Con- 
Additional Allow- tributions .... 25,296,805 



ances 11,536,085 

Disability Allow- Total $38,657,729 

ances 8,492,001 

Refund 3,879,307 

Total $38,657,729 

The system is managed by a retirement board consisting of 
five members : the state superintendent of public instruction, 

286 



New Jersey, Ohio and Vermont 

the state auditor and three teacher members elected by the 
members of the system. Tlie teachers have therefore a ma- 
jority voice in the board — a feature which can hardly be ap- 
proved in view of the fact that the major part of the moneys 
of the system are government funds and the system vitally 
affects public interest and is largely a government function. 

The provisions regarding the merger of local funds with 
the state system is somewhat different than in Pennsylvania. 
If a majority of the members of a local pension fund vote in 
favor of a merger with the state system and the board of ed- 
ucation approves it, then the fund is merged under the follow- 
ing conditions: an actuarial valuation of the fund is made and 
its accrued liabilities and the deficiency contribution necessary 
to cover the latter in case of a merger are determined; all the 
assets and the entire membership of the fund are transferred 
to the state which then assumes the payment of all benefits 
already outstanding or maturing under the new law in the 
future, but the locality must pay to it the deficiency contribu- 
tion determined by the valuation. 

The system consists of the following funds : the teachers' 
savings fund; the employers' accumulation fund, in which all 
contributions of the localities are accumulated ; the annuity 
and pension reserve fund, to which the reserves are transferred 
on retirement and from which annuities and pensions are paid; 
the guarantee fund for the purpose of maintaining uniform in- 
terest and for special requirements; and the expense fund. 

Vermont. In the year 191 3 a law was passed in Vermont 
establishing there a teachers' retirement fund. The funds for 
its financing were to be raised by the Teachers' Retirement 
Fund Association. The state was to contribute an amount 
equal to that raised by the teachers, not exceeding, however, 
$10,000 annually. Annuities of half pay, maximum $500, 
were to be paid to members who retire after attaining 65 years 
of age. In cases of premature disability the retirement board 
287 



Teachers' Pension Systems in the United States 

was to grant such an amount as it saw fit. The board was 
authorized to pay no annuities until in its judgment the fund 
was sufficient, or to pay only reduced annuities, or to give 
preference to certain classes. Approximately only fifty teach- 
ers out of a total of almost two thousand joined the fund. 
No annuities were paid. It was evident that the law was 
entirely inadequate to solve the teachers' retirement problem. 

Efforts were, therefore, made to secure more satisfactory 
legislation. The assistance of the Carnegie Foundation was 
invoked and a new retirement plan was evolved and incorpor- 
ated in a bill (Senate 63) which was introduced in the legisla- 
ture of 19 19. After being amended in several respects it was 
passed and became a law on April 8, 1919. 

The new law authorized the establishment of a new retire- 
ment fund. It did not make its establishment mandatory as 
the original bill did. Neither did it make membership in it 
compulsory for future teachers, as provided in the original 
draft, but made it voluntary for all. 

The system was intended to operate on a permanent and 
stable basis. Unfortunately the bill was amended by the in- 
sertion of a clause that "the total amount appropriated by the 
state in any one year to carry out the provisions of this act 
shall not exceed the sum of $25,000." This sum will, of 
course, be insufficient to finance the system permanently. If 
the majority of the teachers join it, it will be insufficient at 
the very outset. The system would, therefore, be placed in 
the same position as other systems had been, which made 
greater promises than they could fulfill but expected to secure 
amendments that would provide them with additional rev- 
enues when the time of stress would come. 

All members will contribute the same percentage of salary. 
The exact rate will be determined each year by the retirement 
board. The law merely provides that the rate shall not be 
over 5 per cent. The minimum contribution is $16 and the 
maximum $100. After contributing for thirty years a mem- 

288 



New Jersey, Ohio and Vermont 

ber may exercise his option as to whether or not to continue 
contributing. In adopting the uniform rate rather than one 
graduated according to age the framers of the system followed 
the example of Massachusetts rather than that of the New 
York City, Pennsylvania or New Jersey systems. The rigid- 
ity of the uniform rate which produces excessive benefits in 
case of early entrants and inadequate benefits in case of late 
entrants, and especially in case of women, has been pointed 
out in chapter IX and in the preceding section on the Ohio 
law and needs no further comment. 

The law does not make it mandatory upon the state to con- 
tribute, as other pension laws do. It says that besides the 
members' contributions, the annuity fund "shall also consist 
of such amounts as may [not shall, as in other laws] be appro- 
priated from time to time by the general assembly on estimates 
submitted by the retirement board." These estimates shall 
call for an appropriation "sufficient to enable the board to 
credit annually to each member ... a sum equal to his 
contributions to the annuity fund and the additional allow- 
ance. . . . Provided, however, that the state shall not be 
called upon to pay into said annuity fund more than $ioo in 
any year on account of the contributions of any member 
. . . nor shall the total amount appropriated by the state 
in any one year to carry out the provisions of this act exceed 
the sum of $25,000." The state can therefore at any time 
disregard the estimates of the retirement board, reduce its 
contributions or even altogether cease to contribute. Tlie 
system can never be sure of its income. 

Any member who has reached the age of 60, if a man, and 
65, if a woman, and who has served for 30 years in the public 
schools, 20 of which must have been in the state, may retire 
on his own request or may be retired upon the request of his 
employer "without forfeiting any of the benefits of the retire- 
ment system." The latter sentence is rather queer, for it is 
hard to conceive how the benefits of a retirement system could 
289 



Teachers' Pension Systems in the United States 

be forfeited on retirement. The wisdom of such a combined 
old age and long service requirement, as here provided, may- 
be questioned. Experienced and leading teachers invited from 
another state may hesitate to enter the \"ermont service after 
they have passed the 40 or 45 year mark if they know that 
because of the service requirement they would have to serve 
there beyond the superannuation age. It would not be ad- 
vantageous for the state to force late-comers to serve beyond 
the time of their usefulness. The tendency of today reflected 
in most of the recent systems is to encourage desirable migra- 
tion of teachers and take age as the basis for superannuation, 
without regard to length of service. 

The retiring member receives an annuity of such amount 
as his and the state's contributions will provide on the basis of 
the McClintock 3>4 per cent table. To provide against the 
inadequacy of the annuities in case of present old teachers, 
the law allows those of them who have entered after 45 years 
of age "such an additional allowance from the state as may 
be provided by the retirement board" provided that "the total 
annuity shall not exceed one half of his average salary." 
Present teachers entering at the age of 42, 43 or 44 would 
not be entitled to additional allowances when they retire, al- 
though their regular annuity especially in the case of the 
women retiring at 60 would be far below half pay. It may 
be more advantageous for them to postpone joining the system 
until they reach the age of 45 — a point which may undoubted- 
ly raise some confusion. No provision is made for future 
teachers entering at a late age, although their regular annui- 
ties would also be inadequate. The entire method of selecting 
the present teachers above 45 for the enjoyment of the addi- 
tional allowance appears rather arbitrary. The broad discre- 
tion left to the board to determine in their case the amount of 
the additional allowance and the uncertainty in which in the 
meanwhile this class of members may be left as to the amount 
of their benefit is hardly a good feature. 

290 



Xew Jersey, Ohio and Vermont 

Retirement for disability may take place any time after 6 
years of service. But the disability is required to be ''total 
and permanent." The permanency of disability for teaching 
is very difficult to determine. For this reason most of the 
scientific systems do not make such requirements but provide 
for periodical examinations, and reduction or discontinuance 
of the allowance, in case the disabihty decreases or altogether 
ceases and the teacher is partly or entirely reinstated. As the 
annuity of the retired member, purchased by the contributions 
accumulated to his credit, would frequently be insufficient, 
the law provides for him such additional annual allowance 
from the state ''as the retirement board in the exercise of 
sound discretion, shall deem equitable, the same being limited 
bv his earning capacity in other occupations." This additional 
allowance is to be continued "so long and in such amount 
as the retirement board may determine, but in no event shall 
the total sum received annually by such member exceed half of 
the average annual salar>- throughout his entire period of 
service." Xo other board of any other system is known to 
exercise as wide a discretion in this matter. It is generally con- 
ceded that rules ought to take place of discretion. In the ab- 
sence of such rules, in this instance, even.- applicant would 
claim the maximum disability benefit of half pay (exceeding, 
perhaps, the superannuation benefit to which he might have 
entitled had he stayed in the service) on the ground that some 
one else has received it and the board may be greatly inconven- 
ienced by such claims, especially as refusals would lead to 
accusations of imfairness. 

In case of resignation, dismissal or death before retirement 
the original draft of the bill provided a refund of the mem- 
ber's contributions with interest, if the withdrawal or death 
occurred before 6 years of ser^-ice, and of both the member's 
and the state's contributions with interest, if withdrawal or 
death occurred after 6 years of service. The intention was to 
go further than any other system along this line, as the furthest 

291 



Teachers' Pension Systems in the United States 

that the other systems have gone is to refund the member's 
contributions with interest. The intention was excellent but 
was apparently not fully thought out. The feature was pro- 
posed and incorporated in the original plan without any care- 
ful actuarial estimate of its cost, although it was evident that 
the cost would be considerable. Its great cost was bound to 
affect unfavorably the retirement benefits, the adequacy and 
sound financing of which it is exceedingly difficult to realize in 
the beginning of the operation of a system, when the accrued 
liabilities are tremendous. 

The program was partially thwarted as an amendment of 
the bill struck the interest out. The result is precarious. As 
the largest proportion of withdrawals occur before 6 years of 
service, the largest proportion of withdrawing teachers would 
receive only their contributions without interest, i.e. less than 
the members of the New York City, Pennsylvania, New Jersey, 
Massachusetts and Connecticut systems, which started with a 
less ambitious program, would receive under similar circum- 
stances. Those withdrawing between 6 and 30 years of service 
would receive more than a refund of their contributions with 
interest would have provided them. Finally, in case of those 
withdrawing after 30 years, the combined member's and 
state's contributions without interest would approximately 
equal or even amount to less than the member's contributions 
with interest would have amounted to, because interest doubles 
a deposit in approximately 30 years. 

At the time of retirement the member may elect to receive 
a smaller annuity with the provision that if he dies before re- 
ceiving payments equal to the sum of his and the state's contri- 
butions accumulated on his account, the difference shall be 
paid as annuity to his legal representatives. In case of death 
of a disability beneficiary who receives in the form of an 
annuity less than the total accumulations of his and the state's 
contributions on his account, the difference is paid to his legal 
representatives. 

292 



New Jersey, Ohio and Vermont 

The system is administered by the retirement board consist- 
ing of the commissioner of education, the state treasurer, the 
insurance commissioner and two members elected by the mem- 
bers of the retirement system. 

The system consists of the following funds : 

1. An annuity fund in which the contributions of the mem- 
bers and like contributions of the state together with interest 
shall be deposited and from which the annuities and the re- 
funds shall be paid. 

2. A reserve fund, consisting of gifts, returns to the state 
of its contributions to the annuity fund, and balances accruing 
from interest, etc., and which shall be used in the discretion 
of the board for unforseen contingencies, expenses of admin- 
istration or other purposes. 

-3. Accrued liabilities fund, consisting of the moneys re- 
maining from the old retirement fund, of such parts of reserve 
fund as the board may transfer thereto and such other funds 
as the board may receive for the purposes of meeting accrued 
liabilities. This fund shall be drawn upon from time to time 
as needed to make up the contributions of the state to the re- 
tirement allowances. 

Actuarial revaluations are provided every three years and 
the board is empowered to change rates of members' contribu- 
tions, except that such changes could not affect teachers who 
are members at that time, unless they assent to such changes. 

It is to be regretted that no actuarial valuations of the obli- 
gations of the system were made when the bill was framed. 
The total cost of the scheme was practically unknown. The 
systems of New York City, Pennsylvania, New Jersey and 
Ohio at the time they were proposed were accompanied by 
valuations which clearly set before all the parties concerned 
the cost of the benefits involved. It is a sound practice and 
should have been followed. Unfortunately, too many factors 
were left uncertain. The rate of additional allowances, the 
rate of normal contributions of the members and of the state, 

293 



Teachers' Pension Systems in the United States 

the rate of interest, and the mode of discharging accrued Habil- 
ities — all this was left for later determination, instead of being 
agreed upon before enactment, and made a valuation of assets 
and liabilities impossible. It was not surprising, therefore, 
that acting more or less bhndly in this matter the legislators 
introduced in the bill an arbitrary limitation of the annual 
appropriation which would provide the system with an inade- 
quate contribution. 

The old law was repealed and provision was made that the 
old fund shall be merged into the new fund if its members 
vote in favor of it. 

It is to be hoped that the defects mentioned herein will be 
corrected in the course of time and the new system will come 
into accord with the best precedents of scientific pension legis- 
lation. 



294 



APPENDICES 

APPENDIX I 

COMPARATIVE ANALYSIS OF TEACHERS' PENSION 
SYSTEMS 



Teachers' Pension Systems in the United States 



U 





At 

Resignation or 

Dismissal 

Before 
Retirement 


■S, 


Refund of tea- 
chers' contri- 
butions with 
compound in- 
terest; teachers 
who have con- 
tributed for 
more than ten 
yearsmay leave 
their contribu- 
tions on deposit 
and receive 
such annuity 
as they would 
purchase 






& 


■z. 


Upon death be- 
fore retirement: 
Refund of tea- 
chers' contribu- 
tions with in- 
terest at com- 
pound scale 

Optional bene- 
fits: upon death 
after retu-e- 
ment: The tea- 
cher may at the 
time of retire- 
ment choose a 
smaller annuity 
and pension, 
with the pro- 
vision that the 
balance should 
be paid to his 
dependent or 
assignee on his 
death in a lump 
sum or should 
purchase an an- 
nuity for such 
person 




.1 

Q 


I'es; pension af- 
ter 15 years' 
service in the 
state; 1/30 of 
$500 for each 
year of service 


Yes; if 55 years 
of age and re- 
tirement h ap- 
proved by Re- 
tirementBoard; 
same provision 
as for superan- 
nuation; If dis- 
abled before 55 
years of age, re- 
fund of contri- 
butions with 
compound in- 
terest 




2 

§ 

2 
1 


2 
g 

§ 

z 


P 


' 


Retirement al- 
lowanceconsist- 
ing of two.bene- 
fits:annuityand 
pension. Annu- 
ity of such 
amount as tea- 
chers' contribu- 
tions would 
purchase and 
pension paid by 
the state equal 
to the amount 
of annuity. 

Also additional 
pension for em- 
ployees who 
had been in the 


the establishment of the system who had 
served 15 years and are eligible to retire- 
ment; this pension to be such as to make 
the total retu-ement allowance equal the 
amount which they would have received 
had they contributed for 30 years 


-§■■ 


iJ 






1 
§ 


Minimum 
Length 

Service 
(Years) 


41 




.r 
1 

1 




3 S 


z; 


"'is 

OS 


i 

t> 

1 


.2 

5 


Appropriation if 
necessary. 5% 
inheritance 
taxes 


An appropriation 
eachyearof the 
amount needed 
to pay the "pen- 
sions" of that 
year and the 
total adminis- 
trative expense 


s. 

! 


1 
1 


Jl monthly 
(Total contribu- 
tions at date of 
retirement min. 
$300) 


5% of salary, 
min. $25; max. 
$100. No pay- 
ments need be 
made either af- 
ter they are 
suificient to 
purchase an an- 
nuity of $500 at 
age 60, or after 
they have been 
paid for 30 
years 


§ 

■5 

r 

3 
t 

1 
1 


z 


Teach- 
ers 
(1915- 
1916) 


2" 


n 




1 


1 
1 


ill 


Connecticut Tea- 
chers' Retire- 
ment Fund. 
Est. 1917. (Com- 
pulsory; option- 
al at ena^tmeut) 




1 



296 



Appendices 



i 

1 


°- -s 


Yes; at resigna- 
tion before 15 
years; one-half 
own contribu- 


S5 


Yes; refund of 
contributions 
with interest 
at resignation 
or dismissal 
after six years' 
contribution* 
optional for a 
deferred annu- 
ity 


1 
1 


Z 


^ 


Yes; refund of 
contributions 
with interest 
(according to 
the kind of!.- - 
nuity selected 
by the teacher) 


1 


Yes; pension af- 
ter 15 years. 
(2/5 in the 
state) ; same as 
col. "Pension 
scale" 


^ 


§8-1^ 

mi 


i 
i 

en 

i 


i 

s 
g 
1 


a 


1 

11! 


$150 after 25 
years' service; 
$200 after 30 
years and $250 
after 35 years. 
(Those who re- 
tired or were re- 
tired before 
1913 receive 
one -half pen- 
sion) 


Annuity accord- 
ing to accumu- 
lated contribu- 
tions. Maxi- 
mum $750; in 
addition a state 
pension equal 
to the annuity^ 


II 




: 




im 


50 and 25 

(15 in 

state) 

axable property of the 
cities and districts not 
act. 


id 25 
(20 in 
state) 


o 
Z 


a g 




St- 


i 

t5 


i 


When necessary 
not exceeding 
1/10 of a mill 
upon each dol- 
lar of assessed 
valuation of all 
state, exclusive o 
coming under thi 


$8,000 from 
school and mill 
fund for the 
first year $25, 
000 yearly 
thereafter 


Amount noces- 
sary for the 
payment of 
pensions deduc- 
t-d by the state 
from the an- 
nual apportion- 
me.it. Total 
administrative 
expense 


1 

1 
>> 


$5 yearly first 10 
years; $10 next 
5 years; $30 
yearly after 15 
years 

(Minimum total 
contributions 
$400) 


1 


Fixed by Retire- 
ment Board, 
min. 3%, max. 
7% of sal.; now, 
5%; min. 835, 
max. $100. No 
contrib. req. af- 
ter 30 yrs.' con- 
tributing. Max. 
con'ri.purchases 
$500 annuity at 
aee 60. 


No. 
of 
Teach- 
ers 
(1915) 
1916) 


S 
^ 


i 


2" 




1 


; 


Illinoisi Teachers' 
Pension and Re- 
tirement F;ind 
1915 

Compulsory (Op- 
tional for pres- 
ent force up to 
Sept. I, 1915) 


i 
iji 


Massachusetts' 
Teachers' Re- 
tirement Sys- 
tem 

Est. 1913 

Compulsory (op- 
tional at enact- 
ment) 



IE 



s 

Is 

•11 



§ :l 



I .||J 
1 I'll 



o S-8 



fe --g a 



297 



Teachers' Pension Systems in the United States 



z^ 



i 
1 


At 

Resignation or 

Dismissal 

Before 
Retirement 


Yes; at resigna- 
tion one-half of 
own contribu- 
tions without 
interest 


Yes; at resigna- 
tion refund 
one - half own 
contributions 
without inter- 
est 


■s 

i 
1 




Yes; refund one- 
half own con- 
tributions 
without inter- 
est, if no an- 
nuity has been 
drawn 


1 


Yes; pension af- 
ter 15 years 
service; 1/30 of 
full annuity for 
each year of 
service 


Yes; pension af- 
ter 15 years (10 
in state); 1/20 
of $350 foreach 
year of service 


2 

B 

1 
§ 

g 


2 
o 

1 
1 


13 


One-half salary; 
min., $300, 
max., $500 re- 
duced by 1/30 
of full pension 
for each year of 
service below 30 
Board of Retire- 
ment may pro- 
rate pensions in 
case of insuf- 
ficiency of fund 


$350 for 20 years 
of service in- 
creased by $30 
for each year of 
service after 20 
and up to 25 
years" service; 
max. $500 

Board may pro- 
rate pensions in 
case of insuffi- 
ciency of fund 


iJ 


Slil 




Minimum 
Length 

Service 
(Years) 


25 
(15 in 
state) 
Discre- 
tionary 
with the 
Retire- 
ment 
Board 


g|| 




Z 


^ 


s 

O 
1 




1 

z 


al contributions: 
ension.) In case 
of fund. Board 
ntributions from 
om 1% to 2%, 


1/20 of a m.ll of 
alltaxableprop- 
ery outside of 
cities of first 
class 


1 


J^% salary (max. 

$5) first 5 yrs.; 
1% (max. $10) 
next 10 years; 
2% (max^ $20) 
thereafter. (To 
min. 1 year's f 
of insufficiency 
may incre<a3e cc 
K% to 1%, fr 
from 2% to 3? 


$5 for first 5 
years, $10 sec- 
ond 5 years, 
$20 next 10 
years, $30 next 
5 years. For sal- 
aries of $1500 
and more 1M% 
salary (max. 
$20) first 10 
years, 2% sal- 
ary (max. $40) 
next 15 years 


1 


of 
Teach- 
ers 
(1915- 
1916) 


1 






1 




Michigani Teach- 
ers' Retirement 
Fund, 1915 

Compulsory (op- 


§ 


Minnesota' Tea- 
chers' Insurance 
and Retirement 
Fund, 1915 
Compulsory (op- 
tional at enact- 
ment) 



2q8 



Appendices 



1 

g 
1 




ll 


2 


^ 


o 
Z 


1 


•s. 


o 
Z 


z 


>> 

1 




Z 




i 

> 
1 

u 


i 

1 

a 


a!"^ 


. 


i 


li 




^ 


Jill il|l 

1 


IHI 




-5 g 


^^ T3-T1 






IKS 


i 


1 


illi li^ll 

^ .E5|a 


liitll 




1 


ll:i|i|5i 
plilliil! 


i 




No. 

of 
Teach- 
ers 
(1915) 
1916) 


S 


l« 












|||5l 

Z "^"cj 



5r' 






lis 






6 g 



111 

« s " 

HQE- 



299 



Teachers' Pension Systems in the United States 



in 






s 

i 


Resignation or 

Dismissal 

Before 

Retirement 


1.ISI 




1 
1 


Upon death be- 
fore retirement: 
Refund of em- 
ployees' contri- 
butions with 
compound in- 
terest at 4% 
Upon death af- 
ter retirement: 
The employee 
may at the 
time of his re- 
tirement choose 
a smaller an- 
nuity and pen- 
sion with the 
proviaion that 
the balance 
should be paid 
to his depend- 
ent or assignee 
on his death in 
a lump sum or 
shouldpurchase 
an annuity for 
such person 




>> 
^ 


An "employees' 
annuity" of 
such amount as 
his contribu- 
tions will pur- 
chase and a 
"stateannuity" 
which, together 
with "employ- 
ees' annuity," 
will provide a 
retirement al- 
lowance of 1/90 
of his final sal- 
ary for each 
year of service; 
Min. 30% of 
final salary, ex- 
cept where the 
minimum ex- 
ceeds 8/9 of the 
retirement al- 
lowance which 
the employee 
would have re- 
ceived had he 
deferred his re- 
tirement until 
age 62 




1 

1 
g 

1 

tn 

i 




1^ 


The pension con- 
sists of 2 bene- 
fits: an "em- 
ployees' annui- 
ty"and a "state 
annuity;" an 
annuity of such 
amount as em- 
ployees' con- 
tributions will 
purchase. A 
"state pension" 
of 1/160 of the 
final salary for 
each year of 
service prior to 
age 62 and an 
additional pen- 
sion of 1/160 of 
saliry for each 
year of service 
prior to the 
establishment 
of the system. 
Maximum 50% 
of salary 




II 


II 




Minimum 
Length 

Service 
Years) 


§ 
■z 




g 






CO 

i 


1 


2 .8 ^0 of salary 
paid semi-an- 
nually (about 
5.6% annually) 
in respect to 
appointees ap- 
pointed pre- 
vious to estab- 
li.shment of 
sy.stem. Such 
percenta-^es of 
salary as will 
be ne.^e.ssa-y, 
to.;ether with 
interest, to ac- 
cumulate a re- 
serve from 
which "pen- 
sions" of all 
new entrants 
could be paid' 
Total adminis- 
trative expense 




H 1 


.Such percentages 
of .salary as will 
purchasa at age 
62 a pension of 
one - half the 
final salary. 
Rates vary 
from 3.33% to 
5.30% for men 
and from 3.69% 
to 6.39% for 
women. An em- 
ployee may re- 
duce his con- 
tribution but 
not below 5%. 
Contributions 
are caljulatad 
on salaries up 
to $2,000; 
above that they 
are optional^ 




No. 

of 

Teach- 
ers 
(1915- 
1916) 


1 






1 




PennsyUania 
Public School 
Teachers' and 
Employees' Re- 
tirement Sy:s- 
temi 

Eat. 1917 

Coinpulsory (op- 
tional at enac- 
ment) 


: 



2- 



ja 2 

III 

.S So 

111 

1^-2 
^ *-0 

o rt * 

III 

^ V S 






sfa-d 

*■' § S c 

<u _ ■» 3 

-a 5 t-."— 



: CCPi 



300 



Appendices 



1 

n 

1 

o 


At 

Resignation or 

Dismissal 

Before 
Retirement 


Z 


Yes; at resigna- 
tion or dismis- 
sal one-half of 
own contribu- 
tions without 
interest 


1 
1 


1 




< 


Yes; pension af- 
ter 20 years' 
service; same as 
col. "Pension 
Scales" 


Yes; pension af- 
ter 16 years' 
service in state, 
same as col. 
"PensionScale" 


1 
1 

eg 

1 


1 

s 

•< 


.2.2 

1^ 


One-half salary 
for salary be- 
low $1,000; 
max. $400 for 
salary over 
$1,000; max. 
$500 (one- 
quarter salary 
for those re- 
tired in 1902- 
1908) 

Board of Educa- 
tion may pro- 
rate pensions in 
case of insuffi- 
ciency of fund. 


$12.50 for each 
year of service 
max. $450 

Retirement Bd. 
may pro - rate 
pensions in case 
of insuffici'ncy 
of fund 


II 






Minimum 
Length 

Service 
(Years) 


.9 


^"il 






2 


o 
O 


>> 

C3 


6. 

u 
ft 


10 cents for each 
person of school 
age in the state 
set aside from 
certain school 
taxes 


H 

pa 


1% salary'. To- 
tal contribu- 
tions min. 30% 
of last 5 years' 
average salary 
(deducted from 
first year's pen- 
sion if less than 
30%) 


1% salary first 
10 years (max. 
$15). 2% next 
15 years (max. 
$30). (Total 
contributions 
min. 1 year's 
pension; max. 
25 contribu- 
tions $600) 


^ 


of 
Teach- 
ers 
(1915- 
1916) ■: 




s 








II 

llil 


Wisconsin' Tea- 
chers' Insurance 
and Reitrement 
Fund, 1911 
Compulsory (op- 
tional at enact- 
ment) 



•si 



o-o. 
Z4$ 



30] 



Appendices 



i 


1 

a 

1 


g 
1 


■^„l 


III 




Yes; at resigna- 
tion after two 
years; on&-half 
of own con- 
tributions 


Z 


S 

1 


1 


II 
111 

sTs 


o 


2 


z 




•S2 S'S 
I'll 


Iliillll 




2 


1 

1 


i 

s 




III 


ItJiSl 

1 II fill = 




O 
pi 


•og 


ill! 




II 




it .82 


§•3 


-It 




Hi 


^; 


z BS 


" Pi 


z 

1 

1 

22 
> 

u 


1 

1 
1 


6 

03 


11 s 
lit 


id 


i 


m 

:iiii 


1 
1 


liiii 


2g " 


-ill 


•A 


Z. 


44i 


1 


c 




> 








■1 a 


II ill 


1 

iii5 



IJ 



s- S^ 



~-a 



5.2S2S 



302 



Teachers' Pension Systems in the United States 






II 



.2-55 
PQ(£ 



.We 






^Zst^aJ 



^^.s| 



11 






Ci>^>,-K5^«» 






avv'^so. 



j"sl"s- 



g._^ 2 ao- g8 
q3 ^ ^ g-r-Q -ii <u 9 

S_o5.S|c.||2-n 






a >.:^--«*2 



IS-B 






a 
gji 



303 



Teachers' Pension Systems in the United States 



z 

o 



1 
1 


At 

Resignation or 

Dismissal 

Before 

Retirement 


Yes; at resigna- 
tion one-half of 
own contribu- 
tions; at dis- 
missal before 
20 years all 
own contribu- 
tions; at dis- 
missal after 20 
years' pension. 


o 


Yes; one-half of 
own contribu- 
tions at resig- 
nation. Full 
amount without 
interest at dis- 
missal. 


1 
1 


l-ii 


z 


Yes; refund one- 
half own con- 
tributions 
without inter- 
est 


>> 

1 


Yes; pension af- 
ter 20 years 
(one - half in 
county) at the 
discretion of 
the Board of 
Education 


lis 


Yes; pension af- 
ter5yoar3:l/43 
of one-half sal- 
ary for each 
year of service 


1 

§ 

z 

i 


1 
§ 

1 
■a; 


|l 


$12.50 for each 
year of service 
max. $450 (pen- 
sion may be 
prorated in case 
of insufficiency 
of fund) 


8 

09 


ft 


"Sg 




. 




Minimum 
Length 

Service 
Years) 


^i! 


^i| 


)r 30 

(10 in 

city) 

on 

demand; 

40 

in the 

dbcretion 

of the 

Board 


a| 

III 
§1 


z 


60 
for men 
and 55 

women 


g 


§ 
J 


C5 


Minimum 1%; 
maximum 2% 
gross receipts 
of taxation 
raised by School 
Board; absence 
and tardiness 
deductions 


lili 
•? i^° 




1 


$2 monthly. (To- 
tal contribu- 
tions min. $20 
for each year of 
service; deduct- 
ed from pension 
if less; max. to- 
tal contribu- 
tions $600) 




1% salary fir.st 
10 years, l>i% 
next 10 years, 
2% thereafter. 
Total contri- 
butions min. 
1 year's pen- 
sion (deducted 
from first 5 
years'^ pension 


No. 
of 
Teach- 
ers 
(1915- 
1916) 


m 


1 


5 


I 


1 
^ 




ilii 

llHii! 


Denver Teachers' 
Retirement 
Fund 
Est. 1999 


New Orleans 
Teachers' Re- 
tirement Fund 
Est. 1910; 1914 
Compulsory (op- 
tional at enact- 
ment) 



304 



Appendices 



1 


At 

Resignation 

Dismissal 

Before 

Retirement 


ill 

Mil 


1 


Upon death be- 
fore retirement: 
Refund of tea- 
chers 'contribu- 
tions with in- 
terest at 4%; 
and an addi- 
tional lump 
sura benefit of 
one-half of the 
last year's sal- 
ary if the 
teacher was 
eligible to re- 
tirement 

Optional bene- 
fits: upon death 
after retire- 
ment: the tea- 
cher may at the 
time of retire- 
ment choose a 
smaller annuity 
and pension 
with the pro- 
vision that the 
balance should 
be paid to his 
dependent or 
assignee on his 
death in a lump 
sum or should 
purchase an an- 
nuity for such 
Person 


< 


After 10 years of 
service, such 
annuity as the 
teachers' con- 
tributions 
would purchase. 
A pension paid 
by the city of 
1/5 of the av- 
erage salary 
plus additional 
pe:i?ion of 1/35 
of one-quart r 
of average sal- 
ary for each 
year of serv.ce 
prior to Sept. 
16, 1917 (not 
exceeding 35 
years) 

Before 10 years 
of service, re- 
fund of teach- 
ers own con- 
tributions with 
compound in- 
terest at 4% 


i 

i 

S 


1 

b 
O 

g 

<1 


p 


Retirement al- 
lowanceconsist- 
ing of two bene- 
fits:annuity:ind 
pension .amount 
of annuity such 
as the teach- 
ers' contribu- 
tionswouldpur- 
chase; pe-ision 
paid by the city 
of one-quarter 
of average sal- 
ary and also 
additional pen- 
sion of 1/35 of 
one-quarter of 
salary for each 
year of service 
prior to Sept. 
16, 1917 (not 
exceeding 35 
years of service) 


*s g 

II 


Average 
salary 
of last 

10 years 

of 
service 


Minimum 
Length 

Service 
(Years) 


J? 


11' 


c3l 


i 
g 

a 




ployees; 11,- 

ally to the R-j- 
serve Fund to- 
gjtherwithsuch 
appropriations 
as will be neces- 
sary to pay the 

For New En- 
trants: Same 
amount as paid 
by teachers. 

Total admims- 
trative expense 


J 

1 

o 


Preseat employ- 
ees: Sjoh per- 
ccntum of sal- 
ary as shall be 
sufficient to 
purchase at age 
65 an annuity 
which, together 
with pension, 
will amount t.T 
one-half aver- 
age salary. 
Teacher may 
reduce contri- 
bution but not 
below 3%. 

A greater per- 
centum if it is 
desired to pur- 
chase a larger 
annaitv. 

New entrants: 
Such percen- 
tum of salary 
as shall be 
sufficient to 
provide at the 
minimum age 
an annuity of 
one - quarter 
average salary 


^>Mi |l 




s 

1 




New York City 
Teachers' Re- 
tirement Fund 

Est. 1894 

Amended 1895, 
1917 

Compulsory 



305 



Teachers' Pension Systems in the United States 



z;s 



o o 

< I 



i 




ll 

i 


I!. 


Z 


1 

1 
is 


^ 


^ 


5 
1 


Yes; pension in 
the discretion 
of the Board 
after 5 years' 
service; 1/30 of 
fu'l pension for 
each year of 
servicei 


^ 


i 

i 
1 

1 

z 

g 
& 


1 
1 


Ji 


One-half salary 
min. 5400; max 
$1,000; pension 
may be pro- 
rated in case of 
insufficiency of 
fund 


i 


.2-3; 
Sg 


ll 




Minimum 
Length 

of 
Se^^^ce 
(Years) 


.^0 
alwith 
It age 60 
years' 
vice 
city) 


Il3 

S.a-° 


S g 


60 

Option 

teachers 

with 3( 

ser 

(20 in 


z 


i 

s 

1 


1 
>> 


Appropriation of 
an amount 
equal if possible 
to teachers' 
contributionsof 
the preceding 
year 


Annual appro- 
priation for 
the amount 
necessary to 
pay pensions. 


J 
1 


1% salary first 10 
years, 2%there- 
after. max. $50 
(Total must 
equal min. 25 
contributions) 
(deducted from 
pension if less) 


i 


No. 

of 
Teach- 
ers 
(1915) 
1916) 


l"^ 




.2 

1 




Philadelphia Tea- 
chers' Retire 
ment Fund, 
1907 

Compulsory (op- 
tional at enact- 
ment) 


Pittsburgh! Tea- 
chers' Retire- 
ment Associa- 
tion 

Est. 1912 

Compulsory 







C3 ^ ^"O 


Sill 


^f^° 


'"i 1 o 2 


•||il 


Hil 



s g.= 



£ S 2 o 






I go if 






306 



APPENDIX 

REFERENCES TO LAWS, STATISTICAL REPORTS, 

ETC., RELATIVE TO ALL THE TEACHERS' 

PENSION SYSTEMS IN THE 

UNITED STATES 

Note : The following contains, with respect to every teachers' 
pension system now in operation in the United States (May, 
1918) a list of the laws (including laws no longer in force) 
and statistical reports bearing on the system, as well as of 
all published accounts descriptive of it. In a few cases defeated 
bills bearing on the system have been listed because of some 
special significance. 

The arrangement is alphabetical, by states, local systems 
being listed alphabetically under the several states. 

Where not otherwise indicated, the figures giving the num- 
ber of teachers embraced in the several systems are for the 
year 19 15-19 16, and are taken from the report of the United 
States Commissioner of Education for 191 7. 

Valuable synoptic information relative to the provisions of 
most of the systems is contained in analytical tables and charts 
which have been published in various reports and monographs 
on this subject. Nine of these tables are listed below, and a 
Roman number assigned to each. References are made in 
the body of the appendix to these charts by these numbers, 
such references being in every case given under the heading — 
"Analyzed in Comparative Charts." 

List of Comparative Charts 
I. Review of Reviews. June, 1897. v. 15, p. 710-11. 
II. U. S. Bureau of Education. Teachers pensions. 1908. 
p. 13-15. (60th Cong., 2d sess. Senate. Doc. 585. 
Serial no. 5407) 
III. U. S. Bureau of Labor. Pension funds for municipal 
employees, etc. 1910. p. 14-35. (6ist Cong., 2d 
sess. Senate Doc. 427. Serial no. 5658) 

307 



Teachers' Pension Systems in the United States 

IV. Massachusetts. Board of Education. Special report 
on teachers retirement allowances. 1913. p. 33-41. 
(House. Doc. 1913, no. 1926) 
V. Journal of Education. June, 1913. v. 'jy, p. 705; July, 

1913. V. 78, p. 20. 
VI. Prosser, C. A. The teacher and old age. 191 3. p. 120. 
Appendix B. 
VII. National Education Association of the U. S. Committee 
on teachers' salaries and cost of living. Report. 

1913. p. 272-81. 

VIII. Massachusetts. Commission on Pensions. Report. 

1914. p. 312-31. (House. Doc. 1914, no. 2450.) 
IX. Carnegie Foundation for the Advancement pf Teach- 
ing. Annual report, v. 10, 1915, p. 86-99. 

Abbreviations used to indicate books referred to frequently 
and library reference marks : 

Bur. Ed. Bull. 1908. Bureau of Education (U. S.) Bul- 
letin 1908, No. 7. N. Y. Libr. 

Bur. Ed. Bull. 1916. Bureau of Education (U. S.) Bul- 
letin 1916, No. 14, State pension systems for public school 
teachers. Prepared for the Natl. Educ. Assn. by Carson 
Ryan and Roberta King. 37 p. 

Bur. Lab. Bureau of Labor (U. S.) Report on Pension 
Funds for Municipal employees and railroad pension systems. 
In the U. S. Senate, Doc. No. 427, 61 st Cong., 2d Sess., 1910. 

Carn. Found. Carnegie Foundation for the Advancement 
of Teaching. Annual reports (1906-1915) v. I-X. 

Com. Ed. Commissioner of Education (U. S.) Washing- 
ton, D. C. Annual Reports, in 2 volumes. 

Ed. Rev. Educational Review. Monthly ed. by N. M. 
Butler, New York. 

Jour. Ed. Journal of Education, Boston. 

Mass. Bd. Ed. Massachusetts Board of Education. Spe- 
cial report on teachers' retirement allowances, Jan., 19 13, 
47 p. In Mass. House Docs. 1913, No. 1926. 

Mass. Com. — Old Age Pens. Mass. Commission on Old 
Age Pensions, Annuities and Insurance, Jan., 1910. In Mass. 
House Docs. 19 10, No. 1400. 

Mass. Com. Pens. Massachusetts Commission on Pensions, 
Report 1914, March 16. In Mass. House Docs. 1914, No. 
2450. 

308 



Appendices 

N. Ed. Assn. National Education Association. Report 
of the Committee on teachers' salaries and cost of living, Jan., 
1913, 326 p. 

N. Ed. Assn., 1905. National Education Association. Re- 
port of the Committee on salaries, tenure and pensions, July, 
1905, 465 p. 

N. Ed. Assn. Proc. National Education Association. 
Journal of Proceedings and addresses of annual meetings. 
N. Y. Libr.— SSA. 

N. Y. Com. Pens. Teach. Ret. N. Y. Commission on Pen- 
sions. Report on the Teachers' Retirement Fund, N. Y. 191 5. 
N. Y. Libr. 

Sen. Doc. 585. Senate Document (U. S.) 585, 60th Cong. 
2d sess., 1908-09. Teachers' Pensions. N. Y. Libr. 

Prosser. C. Prosser. The teacher and old age, Riverside 
Educational Monographs, 19 13, 139 p. N. Y. Libr. SIW. 

Rev. of Rev. Review of Reviews, (New York) Monthly 
ed. by Albert Shaw. N. Y. Libr. DA. 

ARIZONA 

Arizona Teachers' Retirement System. Established 
1912. 
Number of Teachers, 1,539. Non-contributory. 
Laws 

Sess. Laws 1912, ch. 95. 

Establishing a non-contributory state-wide system, 
repr. in Ar. Sch. L., 191 3, ch. XVI, p. 63-4 and in N. 
Ed. Assn., p. 282. 
Descriptions 

Comm. Ed. 1912, v. i, p. 65. 

Describes merits of the 19 12 scheme. 
Analyzed in comparative charts (Act. 1912), VII, VIII, IX. 

CALIFORNIA 
California Teachers' Retirement Salary Fund. 
Established 1913. 
Number of Teachers, 15,702. Contributory. 
Laws 

Sess. Laws 1895, ch. 166, March 26. Establishing 
voluntary system; repr. in Comm. Ed. 1894-95, p. 
1100-02. Amendments: 1897 March 29; 1901 March 
31; 1903 March 20; 1909 March 11; 1911 March i. 

309 



Teachers' Pension Systems in the United States 

Law 1895 reprinted in amended form in Cal. Sch. L, 
191 1, p. 285-302 and in N. Ed. Assn., p. 282. 1913, 
ch. 694, March 26 (establ. state-wide system). 
Assembly Bill, No. 1263, ch. 694, 7 p. (text of the 
law 1913) 
Reports and statistics 

Biennial Reports, 1913-14, 1915-16. Contains financial 
statement and list of annuitants. 
Descriptions 

Lange, A. A., A proposal for a state retirement system. 
In Sierra Educational News (San Francisco) Dec, 
1909, p. 22-26. 
Comm. Ed., 1909, v. i, p. 117. (Describes amendm. 

1909) 1913, V. I. p. 914. (Describes law, 1913). 
Carn. Found., 1912, p. 34. (Description of pens, bill) 
19 14, p. 30. (Brief description of new system). 
Analysed in comparative charts (Act 1913) ; IV, VI, VII, 

VIII, IX. 
For a history and criticism of this fund, see p. 195. 
San Francisco Retirement Fund. Established 1897. 
Number of Teachers, 1,621. Contributory. 
Laws 

See under California; laws 1895-1911. 
Descriptions 

Comm. Ed., 1903-04, v. 2. p. 2281-82. 
N. Ed. Assn., 1905, p. 183. 
Analysed in comparative charts III, IV. 

COLORADO 
Denver Teachers' Retirement Fund. EstabHshed 1909. 
Number of Teachers, 1,095. Non-contributory. 
Laws 

Sess. Laws 1909, ch. 214, May 5. Permissive for ist 
class district to establish retirem. fund; repr. in N. Ed. 
Assn., p. 291; also in Colo. School Law, 1915, p. 
191-92. 
Reports and statistics 

Report of the School District, No. i, 1913-1914, p. 22-23. 
Statement of receipts and disbursements. 
Analysed in comparative charts (Act 1909) ; IV, VII, 

VIII, IX. 
For a history and criticism of this fund, see p. 219. 

310 



Appendices 

CONNECTICUT 

Connecticut Teachers' Retirement Fund. Established 

1917 
Number of Teachers, 5,525. Contributory. 

Laws 

Spec. Sess. Laws 1899, ch. 123, May 17. Incorporating 

the Conn. Teachers' Annuity Guild. 
Publ. Sess. Acts 1907, ch. 373, July 11. Appropr. 
$10,000 for the Conn. Teachers' Annuity Guild for 
two years. 
Also see under New Haven and New London. 
Senate Bill No. 61, 191 5. In Conn. School Document, 

No. 4, 1915, p. 58-61. 
Proposed a state-wide, non-contributory system;; was 
passed by the legislature, but vetoed by the governor 
on the ground of being unconstitutional. 
Acts 191 7, ch. 411, estabHshing a state-wide system. 
For a history and criticism of this fund, see p. 239. 
New Haven Teachers' Pension Fund. Established 1911. 
Number of Teachers, 779. Contributory. 
Laws 

Spec. Sess. Acts, 1911: July 18. 

Special act amending charter and establishing fund in 
New Haven. 
Analyzed in comparative charts (Act 191 1) : IV, VH, VIII, 

ix. 

New London Teachers' Pension Fund. Established 1911. 
Number of Teachers, 119. Contributory. 
Laws 

Publ. Sess. Acts, 191 1, No. 461. (Establ. fund in New 
London. ) 
Analysed in comparative charts; VII, VIII. 

DELAWARE 

Wilmington Teachers' Retirement Fund. Established 
1911. 
Number of Teachers, 2,77- Contributory. 
Laws 

Sess. Laws, 191 1, ch. 208. (Establ. fund in Wilming- 
ton) 1913, ch. 210, amending law, 191 1. 

311 



Teachers' Pension Systems in the United States 

Descriptions 

Comm. Ed. 191 1, v. i, p. 99. (Describes law 191 1.) 
Analysed in comparatice charts (Act 1911): VII, VIII, 
IX. 

DISTRICT OF COLUMBIA 
Laws 

A Bill to Establish a P.S. Teachers' Retirement Fund 

in the District of Columbia. H.R. 18295, ^i Cong., 

2nd Sess. 1910 May 21, 12 p. (Bill has not passed.) 
Constitution and By-Laws of the Teachers' Annuity and 

Aid Association, Jan. 191 5, 40 p. (Private fund.) 
Reports and statistics 

Teachers' Retirement Fund, Report No. 1379, H.R. 61 st 

Cong., 1910, 4 p. 
Submjitted in support of the bill H.R. 18295, 61 st Cong., 

2nd sess. 
Teachers' Annuity and Aid Association of the District 

of Columbia. 21st and 22nd annual meeting, Jan. 

191 5 and 19 16, 8-page folders. 
Report of the treasurer. Receipts and Disbursements. 
Membership. 
Descriptions 

Comm. Ed. 1909, v. i, p. 120. (Describes pension bill.) 
Carn Found. 191 2, p. 34. (Describes pension bill of 

the Bd. of Ed.) 

GEORGIA 

Atlanta Teachers' Retirement System. Established 
1910. 
Number of Teachers, 795. Non-contributory. 
Laws 

Atlanta Charter and Ordinances, City Code 1910, s. 495- 

500. Establ. retir. system in Atlanta. 
Sess. Laws, 1912, Part III, title i. No. 619, act amend- 
ing sect. 26 of city charter. 
Analysed in comparative charts. VIII. 
Columbus Teachers' Retirement System. EstabHshed 
1913- 
Number of Teachers, 113. Non-contributory. 

312 



Appendices 

Laws 

Sess. Laws, 1913, No. 92, Aug. 11. 

Also printed in the Public School Laws of Columbus, 
Ga. 1914, p. 8-9 (B.M.R. Collection); amendm. of 
city charter providing for pensions to be granted in 
the discretion of the authorities after 25 years of serv- 
ice; max, $25 monthly. 

ILLINOIS 

Illinois Teachers' Pension and Retirement Fund. 
Established 191 5. 
Number of Teachers, 24,947. Contributory. 
Laws 

Sess. Laws 1895, May 31, p. 312-15. 

Permissive act for cities over 100,000 pop. (Chicago) 

repr. In Comm. Ed. 1894-95, p. 1081-82. 

1901 May II, p. 300-01. (Withdrawing compulsory 

feature. ) 

1907 May 24, p. 529-34. 

Mandatory act for cities over 100,000 pop. (Chicago) 

new section added; repr. In. Bur. Ed. Bull, p. 147-50. 

1911 June 6, p. 513-16. 

Permissive for cities of 1,000 to 100,000 pop.; repr. 

In. N. Ed. Assn., p. 292-94. 

191 3 June 27, p. 598-603. 

Special act for cities of 10,000 to 100,000 pop. 

(Peoria.) 

191 5 June 29, p. 648. (Amending 1913 act for Peoria.) 

1915 May 27, p. 649-657. (Establ. state-wide system.) 

Also see under Chicago and Peoria laws 1909, 1911, 

1913 and 1915. 
State Teachers' Pension and Retirement Fund, 19 15, 

lo-p. pamphlet. Contains text of the laws of 191 5. 
Bur. Ed. Bull., p. 150. 

Court decisions regarding compulsion and other fea- 
tures of the Chicago system, 1901-07. 
Attorney General. Opinions re Teachers' Pension Fund. 

In Educational Press Bulletin (monthly of the Dept. 

of Publ. Instruction) May, 1916, p. 2-3. 
Descriptions and digests 

Carn. Found. 191 5, p. 52. (Describing law 191 5.) 

313 



Teachers' Pension Systems in the United States 

Comm. Ed. 1903-04, V. 2, p. 2282. (Extr. from law 
1901.) 

1907 V. I, p. 454. (Extr. from law 1907.) 
191 1 V. I, p. 98. (Describing law 191 1.) 

Analyzed in comparative charts IV (1911); VII, VIII 

(i9i3);IX (1915). 
For a history and criticism of this fund, see p. 176. 

Chicago Teachers' Pension and Retirement Fund. 
Established 1896. 

Laws 

Number of Teachers, 7,992. Contributory. 
Sess. Laws 1895, May 31, p. 312-15. 

Act for cities over 100,000 pop. ; repr. in Comm. Ed. 

1894-95, V. I, p. 1081. 

1901 May II, p. 300-01 amend. (Withdrawing the 

compulsory clause.) 

1907 May 24, p. 529-34 amend. (New sections added.) 

1909 June 12, s. 152-165, p. 384-388 substituting all 

previous laws. Providing that interest on the deposits 

of school moneys should be devoted to the retir. fund. 
Sess. Laws 191 1, June 5 and 6, p. 51 1-5 12; 512 amend. 
■ L. 1909. (Requiring Bd. of Ed. to contribute an 

amount equal to teachers' contributions.) 

191 3 June 26, p. 594-595 amend. L. 1909. (Increasing 

contributions.) 
Board of Trustees of the P. S. Teachers' Pensions and 

Retirement Fund. Rules and regulations as amended 

in 191 1, 27-p. pamphlet. 
Board of Trustees. Rules and regulations in force on 

April 17, 19 14, 59 p. 
Also contains the text of the law as amended in 191 3. 

Reports and statistics 

Comm. Ed. 1898-99, v. 2, p. 1478-79. 

Contains a report of the teachers' committee regarding the 
conditions of the fund at that time; statistical tables. 

Board of Trustees of the P. S. Teachers' Pension and 
Retirement Fund. Official reports of regular and spe- 
cial meetings, 1909-14, 2-p. leaflets. 

314 



Appendices 

Descriptions 

Comm. Ed. 191 1, v. i, p. 98. 

Brief description of the development of legislation 
governing the Chicago fund. 
Ed. Rev. 1902, Feb. p. 156. 

Describes the campaign against compulsion to join the 
fund. 
Analysed in comparative charts III, IV, VII, VIII, IX. 
For a history and criticism of this fund, see p. 220'. 
Peoria Teachers' Pension and Retirement Fund. Estab- 
hshed 191 1. 
Number of Teachers, 425. Contributory. 
Laws 

Sess. Laws, 1913, June 2y (Approving the establishing 
of a fund in Peoria). 

191 5, June 29, p. 649, amending law 1913. 
Board of Management .... Rules and regulations 

adopted Oct. 30, 191 3. 21-p. booklet. 
Contains also the law 191 3 and by-laws. 
Reports and statistics 

Board of Management for the Teachers' Pension and 
Retirement Fund Proceedings 1911-14. 32-p. booklet. 
Proceedings of the meetings and financial reports. 

INDIANA 

Indiana State Teachers' Retirement Fund. EstabHshed 

1915- 
Number of Teachers, 17,706. Contributory. 

Laws 

Sess. Act. 1907, ch. 170, March 9. 

(Permissive for cities over 100,000 pop. [Indian- 
apoHs] to establ. p. funds; repr. in B. Ed. Bull., p. 

153-155-) 
1913, ch. yy. 

(Permissive for cities of 55.000 to 60,000 pop. [Terra 
Haute] to establish p. fund.) 
1913, ch. 334, March 15. 

Permissive for cities of 20,000 to 1000,000 pop. 
1915, ch. 182. 

Establ. a State Teachers' Retir. Fund which any dis- 
trict may join if majority of teachers favor it. 
See also under Indianapolis, law 19 15. 

315 



Teachers' Pension Systems in the United States 

Joint Committee, Indiana .... A bill to provide for 
an Indiana State Teachers' disability and retirement 
law. In Educator Journal (Indianapolis), 1910, p. 
163-70. 

State Teachers' Retirement Law 191 5, 22-p. booklet. 
Text of the law and notes. 
Descriptions 

Carn. Found. (1912) p. 34 (Describes pension bill). 

19 14, p. 37 (Describ. laws 1907-1913). 
191 5» P- 50 (Describ. law 1915). 

Comm. Ed. 1907, v. i, p. 454-56. (Describes law 
1907.) 
Analyzed in comparative charts: VIII (1913), IX (1915). 
Evansville (Established 1913; now merged with the state 
fund). 
Laws 

See under Indiana; laws 1913 and 191 5. 

Indianapolis Teachers' Pension Fund. Established 
1907. 
Number of Teachers, 1,201. Contributory. 
Laws 

Sess. Laws, 1907, ch. 170, March 9. 

Permissive for cities over 100,000 pop. to establish 
pension funds; repr. in B. Ed. Bull. p. 153-155, in 
Ind. Sch. L. 191 1, p. 202-211, in N. Ed. Assn. p. 
294-298. 

191 5, ch. 66, Maich 5. (Increasing city's contribution.) 
Indianapolis P. S. Teachers' Pension and Disability Law. 

1 1 -p. booklet. 

Reports 

Indianapolis P. S. Teachers' Pension Fund. Detailed re- 
port for the seven-year period, 1907-14, annual reports. 
7 typewritten pages. 
Statistics of receipts and disbursements. 

Analyzed in comparative charts: III, IV, VII, VIII (1907) ; 
IX (1915). 

South Bend Teachers' Retirement Fund. Established 
1914. 
Number of Teachers, 340. Contributory. 

316 



Appendices 

Laws 

See under Indiana; law 1913. 
Terre Haute Teachers' Retirement Fund. Established 
1913- 
Number of Teachers, 401. Contributory, 
Laws 

Sess. Laws, 1913, ch. yy. 

Permissive for cities of 55,000 to 60,000 pop. to estab- 
lish pens, funds. 
Teachers' Retirem. Fund Law and By-Laws. — issued by 
the Board of Commissioners, 1913, 20-p. booklet. 
Contains also a table of assessments and annuities. 
Analyzed in comparative charts : VIII, IX. 

IOWA 

Reports 

State Teachers' Association. — Committee of the Educa- 
tional Council. Pensions and Tenure of Office of 
Teachers. In its Proceedings, 1908, p. 30-34. 
Descriptions 

Carn. Found. 1914, p. 35-36. 
Describes defeated pension bill. 

KANSAS 
Laws See under Topeka, Kans. ; law 1911. 
ToPEKA. Established 191 1. 

Number of Teachers, 262. Contributory. 
Laws 

Sess. Laws, 191 1, ch. 280. 

Permissive for ist class cities; repr. in N. Ed. Assn., 
p. 298. 
Descriptions 

Comm. Ed. v. i, p. 99 (describes law 1911). 
Analysed in comparative charts: VII, VIII, IX. 

KENTUCKY 
Laivs 

Sess. Laws, 1912 ch. 129, March 19 (permissive for ist 
class cities) 1914 ch. 17, March 14 (establ. Ins. & 
Annuity Fund for 2nd class cities). 
Analyzed in comparative charts: IX. 
Louisville Teachers' Insurance and Annuity Fund. 
Established 19 12. 

317 



Teachers' Pension Systems in the United States 

Number of Teachers, 883. Entirely contributory. 
Laws 

Sess. Laws, 1912, ch, 129, March 19 (permissive for 
ist class cities). 
Analyzed in comparative charts: (Act 1912) IV, VII, 
VIII, IX. 

LOUISIANA 
New Orleans Teachers' Retirement Fund. Established 
1910. 
Number of Teachers, i ,294. Entirely contributory. 
Laws 

Sess. Laws 1910, ch. 116. 

Establ. Teachers' Retir. Fund for the parish of N. Orl. 

1914, ch. 263. 

Lowering requirements from 40 years' service to 30 

years' service or age 65. 
Act No. 116 creating the Bd. of Trustees of the Teachers' 

Retire. Fund, 1910, i6-p. booklet. 
Act No. 263 of the year 1914 amending act No. 116 of 

the year 1910 . . . . 8-p. booklet. 
Reports and Statistics 

Board of Trustees .... Annual reports of 1914, 

191 5, 4-p. booklet. Statement of receipts, disburse- 
ments, membership and pension roll. 

Analyned in comparative charts III, VII, VIII, IX. 
For a history and criticism of this fund, see p. 218. 

MAINE 
Maine School Pension Fund. Established 1913. 
Number of Teachers, 6,965. Non-contributory. 
Laws 

Sess. Laws, 19 13, ch, 75, March 19. 

Establ. state-wide system ; repr. in State Supt.'s Report 
1914, p. 103-107. 
Application for Teachers' Pensions. Text of the law 
19 13. Rules and regulations. d-D. leaflet. 
Descriptions 

Comm. Ed. 1913, v. i, p. 915. (Extract from law 1913.) 
Carn. Found. 1912, p. 33. (Describes pension bill.) 
State Supt. Report 1914, p. 103-107. (Describes the 
establishment, operation and effects of the law.) 

318 



Appendices 

Analysed in comparative charts (Act 1913) V, VI, VIII, 

IX. 
Pot a history and criticism of this fund, see p. 173. 
MARYLAND 
Maryland Retirement System. Established 1902. 
Number of Teachers, 4,277. Non-contributory. 
Laws 

Sess. Laws, 1902, ch. 196, April 8. 

Establ. state-wide discretionary system. 
1904, ch. 584, sec. 58. 

Increasing appropriation from $10,000 to $25,000. 
1908, ch. 605, April 6, p. 226 amendment. 
1912, ch. 13, April 8 amendment. 

Increasing administr. discretion repr. in N. Ed. Assn. 
p. 304. 
Also see under Allegheny Co., L. 1912; Baltimore 1908, 
Baltimore County 19 12. 
Descriptions 

Carn. Found. 1912, p. 26. (Describes law 1908.) 
1914, p. 25 and 31. 

Describes the unsatisfactory condition of the fund and 
amendm. 191 2. 
Analyzed in comparative charts: III, IV, VI (1902) ; VIII, 
IX (1912). 
Allegheny County Teachers' Retirement Fund, Estab- 
lished 1912. 
Laws 

Sess. Laws, 1912, ch. 463, April 8. 

Establ. Teachers' Retirm. Fund in Allegheny County. 
Board of Trustees, Teachers' Retirem. Fund of the Alle- 
gheny County, 4-p. leafi. 
Text of act 1912. 
Reports 

Statement on the condition of the teachers' retirem. fund 
1915, 191 6. Four mimeogr. pages. (Receipts and 
disbursements.) 
Analyzed in comparative charts: VIII. 
Baltimore Teachers' Retirement Fund. Established 
1909. 
Number of Teachers 2,183. Contributory, 

319 



Teachers' Pension Systems in the United States 

Laws 

Sess. Laws 1908, ch. 78, March 12, p. 595-603." 

Established Retirement Fund for Baltimore City. 
Teachers' Retirement Bill, as passed by the Maryland 
Legislature, 1908- 8p. 
Analyzed in comparative charts III, VII, VIII. 
For a history and criticism of this fund, see p. 214. 
Baltimore County Teachers' Retirement Fund. Estab- 
lished 1912. 
Laws 

Sess. Laws, 191 2, ch. 83, April i. 

Establ. Retirem. Fund for Baltimore Co. 

MASSACHUSETTS 
Massachusetts Teachers' Retirement System. Estab- 
lished 1913. 
Number of Teachers, 14,237. Contributory. 
Laws 

Sess. Acts and Resolves 1908 ch. 498, April 30, and ch. 
589. Permissive for any city to establish pension sys- 
tem; reprint. In Sch. Laws 191 1, p. 78; N. Ed. Assn. 
p. 305; Bur. Ed. Bull. p. 155. 

19 1 3, ch. 832, June 19 (Establ. state-wide system). 

1914, ch. 494. 

191 5, ch. 198. Reducing service requirements for re- 
fund benefits.) 

1916, ch. 54, 60, 238, 257, 152. (Resolves). 

1917, ch. 233, introducing a disability provision. 
Also see under Boston, Mass. 

Reports and statistics 

Teachers' Retirement Board : 

First, second and third annual reports, Dec. 31, 1914. 

191 5, 19 1 6. Review of the provisions and condition 

of the fund. 

Bulletin No. i, 1913 and No. 2, 1915, 30 p. 

Description and text of the law 19 13. 
Descriptions 

Angier, E. M. New plan of teachers' annuities; savings 

bank insurance in Massachusetts. In Education (Bos- 
ton) Dec. 1909, p. 229-233. 
Bur. of Ed. Bui. p. 155-158. (Describ. law 1908.) 

320 



Appendices 

Carn. Found. 1913, p. 46. (Describes law 1913.) 

1914, p. 28 and 29. 

Discusses the good features of the act 1913. 
Comm. Ed. 1907, v. i, p. 449. 

Describ. insufficiency of income of the Teachers' 

Annuity Guild; extracted from 70th report ^i the 

Mass. Bd. of Ed. p. 323-325. 

1908, V. I, p. 104. (Describ. law 1908.) .;fj; 

1913, V. I, p. 914. (Describ. law 1913.) ' 

Bd. Ed. 70th report p. 323-325. 

Describes unsatisfactory condition of the Mass. Annuity 

Guild; its appeal for support. 
Bd. Ed. p. 11-30. (Proposed pension bill.) 
Russel. Eugene D. The teachers' annuity guild. In Jo. 

of Ed. (Mass.) Dec. 17, 1908, p. 659-663. 

Description of the annuity guild, which is a private 

fund. 
Analysed in comparative charts: III, IV, VII (1908) ; VI, 

VIII, IX (1913). 
For a history and criticism of this fund, see p. 234. 
Boston Teachers' Retirement Fund. Established 1000. 
Number of Teachers, 3,054. Contributory. 
Laws 

Sess. Acts and Resolves 1900, ch. 237, Apr. 17. 

Establ. Teach. Retire. Fd. 

1902 ch. 233 (Amend. Teach. Retirem. Fd.) 

1908 ch. 589, June 3. 

Establ. Permanent Fund; reprint, in Bur. Ed. Bull., 

p. 156-8. 

1910 ch. 617. 

(Amending Permanent Fund, increasing the pension 

and extending it to sixty annuitants of the Retirement 

Fund. ) 

1912 ch. 569. 
Boston Teachers' Retirement Fund Association. Con- 
stitution and By-Laws 191 2. 
Reports and statistics 

Committee on Finance. Report to the Bd. of Trustees 

of the Boston P. S. Teachers' Retirement Fund, 1902, 

6 p. 

Recommending the amount of annuity in 1903 to be 

$168. 

321 



Teachers' Pension Systems in the United States 

Comm. Ed. 1907, v. i, p. 448-49. 

Report of the retirem. fund, reprinted from Mass. Bd. 

Ed. 70th report, p. 320-23. 
Montgomery, W. ]., State Actuary. Report to the Bd. 

of Trustees of the Boston Teachers Retirement Fund, 

Sept. 16, 1914, 14 p. 

Analyzes the unsatisfactory condition of the fund, de- 
fines the amount of annuity it can sustain and proposes 

certain recommendations to strengthen the fund. 
Secretary of the Teachers' Retirement Fund, Annual Re- 
ports, 1900-1914. (4-page leaflets.) 
Permanent Pension Fund, Annual report for the year 

1916. In the Minutes of the Boston School Committee, 

Feb. 21, 1916, page 19. 
Descriptions 

Carn. Found. 1912, p. 41. (Description of the Retirem. 

Fund. ) 
Comm. Ed. 1894-95, v. i, p. 1079-81. 

Description of the establishment of the Mut. Ben. 

Assn. ; extract from Supt's report. 

1903-4, V. 2, p. 2282. (Describes act 1900.) 
Mass. Bd. Ed. 70th report, p. 320-23. 

Describes Retir. Fund and Mutual Benefit Association; 

receipts and disbursements. 
N. Ed. Assn. 1905, p. 183. (Describes retir. fund.) 
Mass. Com. Old Age Pens., p. 278. 

Description of the Retirement and Permanent Fund. 
Mass. Com. Pens., p. 31-63. 

Actuarial rept. showing a deficiency in the Retirement 

Fund of $1,312,687. 

p. 149-153 (history and legislation). 

p. 205-207 (proposed ligislation). 

Boston School Committee. Circular of information, 

191 5, p. 38. Brief description of provisions of the 

Permanent Fund. 
Analysed in comparative charts III.. (Benev. Assn. 1889; 

funds 1900-08) ; IV, VII, VIII, IX (1900-12). 
For a history and criticism of this fund, see p. 209. 
Boston Teachers' Permanent Fund. Established 1908. 
See Laws under Boston Teachers' Retirement Fund above 
For a history and criticism of this fund, see p. 212. 

322 



Appendices 

Brookline 

Number of Teachers, 196. Non-contributory. 
Laws: See under Mass. Act. 1908. 

MICHIGAN 
Michigan Teachers' Retirement Fund. Established 191 5. 
Number of Teachers, 18,583. Entirely contributory. 
Laws 

Publ. Acts, 191 5, ch. 174, May 11. 

Establishing state-wide system. 
Also see under Detroit Laws 1895 and 1907. 
Descriptions 

Carn. Found. 191 5, p. 53. (Describes law 191 5.) 
Analyzed in comparative charts: IX. 
For a history and criticism of this fund, see p. 200. 
Detroit Teachers' Retirement Fund. Established 1895. 
Number of Teachers, 2,396. Contributory. 
Laws 

Loc. Sess. Acts 1895, ch. 431, May 22. 

Establ. Retir. Fund in Detroit; printed together with 
by-laws in Comm. Ed. 1894-95, p. 1082. 
1907, ch. 536, May 14. (Amendment making mem- 
bership compulsory.) 
Board of Trustees of the P. S. Teachers' Retirement 
Fund. i2-p. booklet. (Text of law 1907, constitu- 
tion and by-laws.) 
Reports and statistics 

Board of Trustees .... Regular meeting, May 20, 
i9i5;Sept.20, 1915. 

Receipts, disbursements, list of annuitants. 
Descriptions 

Comm. Ed. 1903-04, v. 2, p. 2283. 
N. Ed. Assn. 1905, p. 182-183. 
Analyzed in comparative charts: (Act 1907) : III, IV, VII, 
VIII, IX. 

MINNESOTA 

Minnesota Teachers' Insurance and Retirement Fund. 
Established 19 15. 
Number of Teachers, 14,759. Contributory. 
Laws 

Gen. Sess. Laws 1909, ch. 343, Apr. 21. 



Teachers' Pension Systems in the United States 

Permissive for cities over 50,000 pop. to establish 

pension system; repr. in Minn. Sch. L. 191 1, p. 106; In 

N. Ed. Assn. 
Gen. Sess. Laws 1911, ch. 383, Apr. 20. 

Extending L. 1909 over cities exceeding 10,000 pop.; 

repr. In Sch. L. 191 1, p. 106; In N. Ed. Assn., p. 305. 

191 5, ch, 199, Apr. 20. 

Establ. state-wide system : Teachers' Insurance and Re- 
tirement Fund. 
Department of Education, Minn. Law, 191 5, ch. 199, 

6-page booklet. 
Descriptions 

Comm. Ed. 1909, v. i, p. 118. (Describes law 1909.) 

191 1, V. I, p. 99. (Describes amendm. 191 1.) 
Carn. Found. 191 5, p. 51-52. (Describes law 191 5.) 
Teachers' Insurance and Retirement Fund. Circular of 

information, July, 191 5, 4-page leaflet. 

Explaining the law. 
Analysed in comparative charts VII, VIII (1911); IX 

(1915)- 
For a history and criticism of this fund, see p. 190. 

DuLUTH Teachers' Retirement Fund Association. 
Established 191 1. 
Number of Teachers, 469. Contributory. 
Laws: See under Minnesota; law 1911. 
Descriptions 

Carn. Found. 1912, p. 36. 
Analysed in comparative charts: IV, VIII, IX. 
Minneapolis Teachers' Retirement Fund Association. 
Established 1909. 
Number of Teachers, 1,606. Contributory. 
Laws: See under Minnesota, Laws 1909 and 191 1. 
Reports and statistics: Minneapolis Teachers' Retirem. 
Fund Assn. Sixth Annual Report 1914-15. 16 p. 
Contains a statement of receipts and disbursements,, 
balance sheet and secretary's report. 
Analysed in comparative charts: III (1909) ; IV, VIII, IX 

(1911). 
St. Paul Teachers' Retirement Fund Association. 

Established 1909. 
Number of Teachers, 959. Contributory. 

324 



Appendices 

Laws: See under Minnesota, Session laws 1909 and 191 1. 
Teachers' Retirement Fund Association, articles of in- 
corporation and by-laws, 18 p. 
Analyzed in comparative charts: III (1909); VIII, IX 
(1911). 

MONTANA 
Montana Public School Teachers' Retirement Salary 
Fund. Established 191 5. 
Number of Teachers, 4,731. Contributory. 
Laws 

Sess. Laws 191 5, ch. 95, March 8. 

Establishing state-wide system. 
Retirement Salary Fund Board. P. S. Teachers' Retire- 
ment Salary Fund. 8-p. booklet. (Text of the law.) 
Descriptions. 

Carn. Found. 1915, p. 52. (Describes law 1915.) 
Analysed in comparative charts: IX. 

NEBRASKA 
Descriptions 

Carn. Found. 19 12, p. 52. (Describes Recommendations 

of the committee, 191 5; listed by error as a law). 
Neb. Supt. Ed. 23rd Report, p. 342-44. 

Describes recommendations of the special committee 
as to the establishment of a state-wide system. 
Analysed in comparative charts: IX. 

Recommendations of Special Committee; listed by error 
as a law. 
Omaha Teachers' Retirement Fund Association. Estab- 
lished 1909. 

Teachers' Annuity and Aid Association (private fund) 
establ. in 1897. 
Number of Teachers, 947. Contributory. 
Laws 

Sess. Laws 1909, ch. 132, March 24. 

Permissive for mietropol. cities repr. in N. Ed. Assn. 
p. 306-307. 
Teachers' Annuity and Aid Association. Articles of in- 
corporation and By-laws, 33-p. booklet. 
Descriptions 

Carn. Found. 1914, p. 37. 

Comm. Ed. 1909, v. i, p. 115. 

325 



Teachers' Pension Systems in the United States 

NEVADA 
Nevada Teachers' Retirement Salary Fund. Established 

1915- 
Number of Teachers, 657. Contributory. 
Laws 

Sess. Statutes 191 5, ch. 198, March 23. 
Establ. state-wide system. 
Descriptions 

Carn. Found. 1915, p. 54. (Describes law 1915) 
Analyzed in comparative charts: IX. 

NEW HAMPSHIRE 
New Hampshire Teachers' Retirement System. Estab- 
lished 1915. 
Number of Teachers, 3,083. Non-contributory. 
Laws 

Sess. Laws 1915, ch. 165, April 21. 

Establ. state-wide system. 
Dept. of Public Instruction. Division of statistics and 
accounts. 

Rules and regulations relating to Teachers' Pensions. 
7-p booklet. 
Text of the law and regulations. 
Descriptions 

Carn. Found. 1915, p. 55. (Brief description of Act 

1915-) 
Analyzed in comparative charts: IX. 

NEW JERSEY 
New Jersey Teachers' Retirement Fund. EstabHshed 1896. 
New Jersey Teachers' 35-YEAR Service Half Pay Pen- 
sion System. Established 1903. 
Number of Teachers, 16,^41. Contributory. 
Laws 

Publ. Sess. Laws 1896, ch. 32, March 11. 

Establ. Retir. Fund; i per cent sal. deduction. 
L. 1899 ch, 178 (amend. Ret. F.). 
L. 1900 ch. 96 (making Ret. F. Law a part of the 
school law). 
Spec. Sess. Laws 1903, ch. i, art. XXV, Oct. 19. 

L. 1905 ch. 95 (appropriation for administ. expense 
of Ret. F.). 

326 



Appendices 

Sess. Laws, 1906, ch, 314, June 13. (Increasing salary 
deductions.) 

Sess. Laws, 1917, ch. 139, May 7. 

Sess. Laws, 1903, ch. 16, March 5 (estabhshing service 
pension system of the Bd. of Education). 

Sess. Laws 1906, ch. 103. 

Reducing length of service from 40 to 35 years. 
1907, ch. 121, May 7 and 1912, ch. 58 amendment. 
Reprint, in N. Ed. Assn. 
191 1, ch. 276 and 1912, ch. 58 amendment. 
1914, ch. 268, Supplem. to Gen. School Law, 
Pension to be paid by the state and not by local authori- 
ties; new section added. 
Reports and statistics 

State Teachers' Retirement Fund Association. Report 
of the Retirement Fund Department. In Annual Re- 
ports and Proceedings of the N. J. Teachers' Associa- 
tion, 1910, p. 160-75. 

Report .... Sept. 25, 1915..15 P- 

Contains a statement of receipts and disbursements; 
comparison between N. J. and the N. Y. and Mass. 
funds; defense of its soundness; note reactuarial study; 
answer to criticism. 

New Jersey Woman Teachers' Alliance. Compendium 
of Facts. 19 18. Contains the report of D. P. Fackler. 
actuary, on the condition of the Teachers' Retirement 
Fund; introduction by Miss E. A. Allen; synoptical 
tables. 

Bureau of State Research of the New Jersey State 
Chamber of Commerce. Teachers' Reirement Sys- 
tems in New Jersey, Their Fallacies and Evolution. 
Prepared by Paul Studensky, 19 18. 88 p. Analysis 
of the history of the systems, their present condition 
and practical remedies. 

Pension and Retirement Fund Commission of the State 
of New Jersey. Preliminary report. January, 1918. 
State Research Consecutive number 9. 20 p. Con- 
tains in chapter iv a discussion of teachers' systems. 

Pension and Retirement Fund Commission of the State of 
New Jersey. Reorganization of New Jersey Teachers' 
Pension and Retirement Systems, January, 19 19. State 



Teachers' Pension "Systems in the United States 

Research Consecutive number 13, 28 p. Contains criti- 
cal and constructive conclusions, outline of proposed 
legislation and actuarial estimates. 
Descriptions 

Allen, Elizabeth A. The story of a woman's campaign. 
In Review of Reviews (N.Y.) 1897, v. 15, p. 701-11. 
Writer describes the campaign which resulted in the 
establishment of the N. J. Teachers' Retirement Fund; 
surveys the existing pension funds in the U. S. ; pre- 
sents a comparative table of annuity and aid associa- 
tions and retirement funds in the U. S. 

Board of Trustees of the Teachers' Retirement Fund. 
1907, 23 p. 

Contents: Preface, text of the law 1907, explanation 
synopsis and appeal to join. 

Carn. Found. 1912, p. 27-30. (History of the fund.) 
— — 191 5> P- 62. (Warning the fund against 
the approaching disaster.) 

Comm. Ed. 1894-95, v. i, p. 1108-1113. 

Description of a plan for a Newark Teachers' Retire- 
ment Fund ; criticism and discussion. 
1903-4, V. 2, p. 2283-84. (Extracts from the law and 
report of the fund.) 
1907, V. I, p. 452. (Report of the fund.) 

1911, V. I, p. 99. (Description of amendm. 1911.) 

1912, V. I, p. 67. 

Description of amendm. 1912 ; comment on coexistence 
of two systems. 
Crater, Georgia Beers. Teachers' Pensions. In N. J. 
State Teachers' Association. Annual Report and Pro- 
ceedings 1900, p. 147-58. 
State Teachers' Association. Tenure Retirement Fund 
and Pensions in peril. 9-p. pamphlet. 
Contains an appeal to defeat the bill No. 375 merging 
the retir. fund with the state half -pay pension. 
Analysed in comparative charts III-IX. 

In VII and VIII, the two systems are confused. 
For a history and criticism of the two systems, see pp. 169 
and 183." 

^See also Chapter XVIII and Appendix 3 (e) regarding three new- 
laws (Ch. 80, 81 and 82) enacted in April, 1919. 

328 



Appendices 

NEW YORK 

New York State Teachers' Retirement Fund. Estab- 
lished 191 1, 
Number of Teachers, 24,102. Contributory. 
Laws 

Sess. Laws, 1895, ch. y6y, May 2y. 

Permissive for any town to establ. pension funds; re- 
print in N. Ed. Assn. p. 308-12. 

191 1, ch. 449, June 26. (Establ. state-wide system.) 

1913, ch. 511, Sec. 1100-1108. (Superintendent to par- 
ticipate.) 

1914, ch. 44, Mar. .17. 

Providing for a state-contribution of i per cent of sal. 
Also see under: Albany, Buffalo, Cohoes, Elmira, Mt. 
Vernon, N. Y. City, Nassau, Rochester, Saratoga, 
Schenectady, Syracuse, Troy, Yonkers, Watervliet, 
Westchester. 

Also see N. Y. L. 19 10 ch. 441, June 8. 
Retirem. Fund for teachers in state institutions. 
State Teachers' Retirement Fund Board, Documents 1-3. 
Doc. No. 2 contains the text of the law as amended 
in 1914; No. 3 contains portions of the law, by-laws, 
explanatory notes as to retirement, age, etc. ; instruc- 
tions to teachers. 
Descriptions 

Carn. Found. 1912, p. 30-33. (Describes law 1911.) 
Comm. Ed. 191 1, v. i, p. 96. (Describes law 191 1.) 

1912, V. I, p. 67. (Describes am. 1912.) 
Analysed in comparative charts: III-VIII (1911) ; IX (also 

1913-14). 
For a history and criticism of this fund, see p. 179. 
Albany Teachers' Retirement Fund. Established 1908. 
Number of Teachers, 440. Contributory. 
Laws 

Sess. Laws 1907, ch. 414, June 4. (Establ. Retir. Fund.) 
1910, ch. 451, June 9. (Increasing excise money con- 
tribution from 3 per cent to 5 per cent.) 
Reports and statistics 

Comptroller's report of the teachers' retirement fund for 
the years 1913-1915. (Two-page mimeographed leaf- 
lets.) B. M. R. Collection. 

329 



Teachers' Pension Systems in the United States 

Analysed hi comparative charts: III, IV, VII. 
Buffalo Teachers' Retirement Fund. Established 1896. 
Number of Teachers, 2,136. Contributory. 
Laws 

Sess. Laws 1891, ch. 105. 

(Permissive for Buffalo to establish Retir. Fd.) 
1896, ch. 928 (establishing Retir. Fund in Buffalo; 
entirely contributory). 
1909, ch. 554, May 28. 
Increasing salary deductions and making city to con- 
tribute an equal amount. 

1914, ch. 217, Apr. 7, sec. 294-304, city charter. No 
material changes. 
Analysed in comparative charts III, IV, VII-IX. 
For a history and criticism of this fund, see p. 216. 
Cohoes Teachers' Retirement Fund. Established, 1908. 
Number of Teachers, 69. Contributory. 
Laws 

Sess. Laws 1908, ch. 332, May 19. 
Establishing Retir. Fund in Cohoes. 
Analyzed in comparative charts: IX. 
Elmira Teachers' Pension Fund. Established 1907; now 
merged with the State Teachers' Retirement Fund. 
Laws 

Sess. Laws 1907, ch. 86, March 27. 

Establ. Pens. Fund; reprint, in Bur. Ed. Bull., p. 
159-160. 
Analyzed in comparative charts: III, IV. 
Green County Teachers' Retirement Fund. Established 
1910; abolished in 191 1. 
Laws 

Sess. Laws 19 10, ch. 444. (Establishing retir. fund in 
Green County.) 
1911, ch. 146. 

Abolishing retir. fund teachers contribute to the state 
fund. 
Mt. Vernon Teachers' Retirement Fund. Estabhshed 
1909. 
Number of Teachers, 246. Contributory. 
Laws 

Sess. Laws 1909, ch. 92, Mar. 17. 

330 



Appendices 

Establ. retir. fund in Mt. Vernon. 
191 3, ch. 44, Feb. 27 (Compulsory membership). 
Analysed in comparative charts: IX. 
Nassau County Teachers' Retirement Fund. Estab- 
lished 1910; now merged with the State Teachers' Retire- 
ment Fund. 
Laws 

Sess. Laws 19 10, ch. 407, June 7. 
Establ. retir. fund in Nassau County. 
191 1, ch. 692. (Amending law 1910.) 
New York City Teachers' Retirement Fund. Estab- 
lished 1894. 
Number of Teachers, 23,905. Contributory. 
Laws 

Sess. Laws 1894, ch. 296. 

Establ. N.' Y. fund; repr. in Comm. Ed. 1894-5, p. 

1095'. 

1895, ch. 656. (Establishing Brooklyn fund.) 

1898, ch. 91. (Providing the fund with a portion of 

excise taxes.) 

1901, ch. 186 and 466. (Merging the two funds.) 

1902, ch,'530. 

1903, ch, 177. 

1905. ch. 661. (Introducing the i per cent. sal. deduc- 
tion.) 

1907, ch. 167. (Reprint, in Bur. Ed. Bull. p. 160-3.) 
191 7. (Reorganizing the old fund on a scientific basis.) 

By-Laws of Bd. of Ed. 191 1, Jan. 18. 
Descriptions 

Carn. Found. 1912, p. 39-41. (Description of the his- 
tory and condition of the fund.) 
I9I3» P- 53"55- (Alarming condition of the fund.) 
1914, p. 39. (Collapse of the fund.) 
191 5' P- 59-60. (Investigation of the N. Y. Pension 
Commission.) 

Comm. Ed. 1894-95, v. i, p. 1095. 

Text of the law 1894; constitution of Mut. Ben. Assn. 
1903-4, V. 2, p. 228. (Brief description.) 

N. Ed. Assn. 1905, p. 183. (Brief description.) 

See also under Reports. 

Pension Points No. 1-5 and Circulars. 

331 



Teachers' Pension Systems in the United States 

Issued during the pension campaign of Jan. -April 
191 6; explain provisions of the Lockwood-Ellenbogen 
bill and urge to support it. 

Scrap-Book on the N. Y. Teachers' Retirement Fund. 
Contains newspaper clippings for the period 1 912-16; 
campaign in favor of the Lockwood-Ellenbogen bill. 

Federation of Teachers' Associations, N. Y. City. The 
A. B.C. of teachers' pensions. Memorandum submitted 
to the Senate Committee on Affairs of cities. In favor 
of the Lockwood-Ellenbogen bill. 19 16, 20 p. 
Describes the advantages of the proposed bill. 

Paul Studensky. New York City Teachers' Retirement 
Fund. In National Municipal Review, July, 1916, 

p. 520-22. 
Review of the report of the Commission on Pensions. 
Unsoundness of using miscellaneous revenues. In- 
adequacy of contributions. Purposes of pension funds. 
Harmful benefits. Plan of reorganization. 
Reports and statistics 

Commission on Pensions. Report on the Teacher's' 
Retirement Fund, City of N. Y. 

Prepared by Robert von Reutlinger, letter of transmittal 
by Henry Bruere, vice-chairman and secretary of the 
commission. Present pens, system. Its cost. A tenta- 
tive reorganization plan. History of the fund and its 
administration. Actuarial report. Statistical tables. 

Commission on Pensions. Report on the Pension Funds 
of the City of New York, Part I. Operation of nine 
pension funds, 1916, 171 p. 

Prepared by Robert von Reutlinger, letter of transmittal 
by Henry Bruere, vice-chairman and secretary of the 
commission. A critical analysis; includes among the 
nine funds the teachers' fund. 

Part II. An actuarial investigation of the mortality and 
service experience of the Special and General Service 
Funds for Municipal employees, 1916, 422 p. 
Prepared by George B. Buck, actuary. Letter of trans- 
mittal by Henry Bruere, vice-chairman and secretary 
of the commission. Contains an introduction describ- 
ing forces which determine cost; methods of computing 
rates. Includes tables and diagrams on family history 
and a valuation of assets and liabilities. 

332 



Appendices 

Secretary of the Board of Retirement of the Teachers' 
Retirement Fund. Annual reports 1908 to date. 

191 1 (contains a description of the efforts to amend the 
law). 

1912 (contains a description of the condition of the 
fund; British and N. Zealand pens, systems). 

191 3 (contains the report of actuary Hutchinson, re- 
printed by the Globe in separate pamphlet. Actuary 
describes past and present systems; income and dis- 
bursements; teachers' service experience; mortality 
rates ; valuation of liabilities ; unsatisfactory conditions 
of the fund; constructive recommendations of the 
actuary. ) 

Analyzed in comparative charts: III, IV, VII-IX; also In 
N. Y. Com. Pens. Teach. Ret. p. 90-91. 
Showing the changes in legislation from 1891 to 191 1. 
For history and criticism of this fund, see p. 243. 
Rochester Teachers' Retirement Fund. Established 
1906. 
Number of Teachers, 1,178. Contributory. 
Laws 

Sess. Laws 1905, ch. 608, May 25. (Establ. Retirem. 
Fund in Rochester.) 1907, ch. 755, sec. 405. 
Section of city charter amending law 1905. 
Analysed in comparative charts: III, IV VII-IX. 
Saratoga County Teachers' Retirement Fund. Estab- 
lished 19 10, now merged with the State Teachers Retire- 
ment Fund. 
Laws 

Sess. Laws 1910, ch. 191, Apr. 29. 

Establ. Retirem. Fund in Saratoga County. 
Schenectady Teachers' Retirement Fund. Established 
1907, now merged with the State Teachers' Retirement 
Fund. 
Lazvs 

Sess. Laws 1907, ch. 306, May 6 (Establ. Ret. Fd. in 
Schenectady) 1908, ch. 116, Apr. 13 (Making city 
contribution equal teachers' contribution). 
Analyzed in comparative charts: III, IV. 
Syracuse Teachers' Retirement Fund. Established 1897. 
Number of Teachers, 667. Contributory. 

333 



Teachers' Pension Systems in the United States 

Laws 

Sess. laws 1897, ch. 750, May 22. 

Establ. RetirCxn. Fund in Syracuse; entirely contribu- 
tory; reprint in a separate booklet. 
Analysed in comparative charts: III, IV, IX. 
Troy Teachers' Pension Fund. Established 1906. 
Number of Teachers, 327. Contributory. 
Laws 

Sess. Laws 1906, ch. 305, April 24. (Establ. Pens. Fund 
in Troy.) 
Analyzed in comparative charts: III, IV, IX. 
Watervliet Teachers' Retirement Fund. Established 
1908, now merged with the state Teachers' Retirement 
Fund. 
Laws 

Sess. Laws 1908, ch. 140, April 16. 
Establishing Retir. Fund in Watervliet. 
Westchester County Teachers' Retirement Fund. 
Established 1909. 
Laws 

Sess .Laws 1909, ch. 431, May 22. 

Establishing Retirement Fund in Westchester County. 
1911, ch. 23, March 16 am. 
City's contribution to equal i per cent of sal. 
YoNKERS Teachers' Retirement Fund. Established 1908; 
now merged with the State Teachers' Retirement Fund. 
Laws 

Sess. Laws 1908, ch. 452, May 21, city charter, article 
IX, sec. 18-20. 

Establ. Retir. Fund in Yonkers. 
Analysed in comparative charts: III, IV, IX. 

NORTH DAKOTA 
North Dakota Teachers' Insurance and Retirement 
Fund. Established 1913. 
Number of Teachers, 8,093.^ Contributory. 
Laws 

Sess. Laws 191 3, ch. 251, March 11. 
(Establ. state-wide system.) 
Descriptions (Act 191 3) 
Carn. Found. 1914, p. 31. 

^Statistics of 1915. 

334 



Appendices 

Comm. Ed. 1913, v. i, p. 915. 
Analysed in comparative charts: VIII, IX. 

OHIO 
Note: Uniform laws (1911 at present) govern all the 
twenty cities which have availed themselves of the au- 
thority given under these laws. The references to leg- 
islation and to analysis of legislation in comparative 
charts are, therefore, given under the state and are not 
repeated under each of these pension funds : Bellefont- 
aine (1912) No. of Teachers, 49; Canton (1913) No. 
of Teachers, 290; Chillicothe (191 3) No. of Teachers, 
80; Cincinnati (1897) No. of Teachers, 1,807; Cleve- 
land ( 1906) No. of Teachers, 3,693 ; Columbus (1909) 
No. of Teachers, 996 ; Dayton ( 191 1 ) No. of Teachers, 
557; Fremont (1914) No. of Teachers, 64; Hamilton 
(1908) No. of Teachers, 164; Lakewood (1914) No. 
of Teachers, 152; Massillon (1914) Norwalk (1913) 
No. of Teachers, 51; Norwood (1912) No. of 
Teachers, 114; Piqua (1913) No. of Teachers, 72; 
Sandusky (19 10) No. of Teachers, 104; Springfield 
(1907) No. of Teachers. 238; Tiffen (1911) No. of 
Teachers, 51; Toledo (1910) No. of Teachers, 983; 
Youngstown (1905) No. of Teachers, 536; Zanesville 
(1914) No. of Teachers, 121. All these systems are 
contributory.^ 
Laws 

Sess. Laws 1896, Apr. 14,' p.- 152-55, sec. 3897 of Rev. 
St. Permissive for cities of ist grade ist class. 
1900, Apr. 16, 'p. 305. (Increasing sal. deductions to 
$2 monthly.} 

1902, May 12, p. 609-14. (Permissive for all school dis- 
tricts.) 

1904, Apr. 2'5, p. 340. (Providing for city contribu- 
tion up to 2* per cent of school taxes. ) 
191 1, June '1 3, p. 445-56. (Making membership com- 
pulsory; reprint, in Sch. L. 1912, p. 167, sec. 7875- 
7896 of Gen. Code; N. Ed. Assn., p. 313-315.) 
Descriptions 

Bur. Ed. Bui. p. 163-64. 

'See Chapter XVIII and Appendix 3 (f) regarding a new state-wide 
pension law enacted in April, 1919. 

335 



Teachers' Pension Systems in the United States 

Court decisions as to compulsory membership, etc. 
Comm. Ed. 1903-4, v. 2, p. 2284-85 (describes law 1902). 

191 1, V. I, p. 97 (describes law 1911). 
Jones, E. A. A state-wide pension system. In Ohio 
Educational Monthly, July, 19 10, p. 317-24. 
Analysed in comparative charts: III, IV, VII-IX. 
Canton — (See note under Ohio) 
Reports and pamphlets 

Report of Teachers' Pension Fund, 19 13-15. Two mime- 
ographed pages. 

Receipts and disbursements, annuity list. 
Cincinnati — (See note under Ohio) 
Reports and statistics 

Board of Trustees of the Cincinnati Teachers' Pens. 
Fund. Annual report. In Com. Ed. (U. S.) 1907, 
V. I, p. 452. 

Receipts and disbursements, etc. 
Board of Trustees of the School Teachers' Pension Fund. 
Eighteenth Annual Report, Aug. 31, 191 5. 8-page 
pamphlet. 

Receipts, disbursements, pension list, amounts con- 
tributed by pensioners and amounts drawn by them. 
Descriptions 

Comm. Ed. 1898-99, v. 2, p. 148 1. 

Describes new law increasing contributions to save the 
fund from depletion. 
Cleveland Teachers' Pension Fund. Established 1907. 
(See note under Ohio.) 
Laws 

School Teachers' Pension Law as amended May 31, 
1911. Rules and Regulations, Cleveland, 1914. 16- 
page pamphlet. 
Reports and statistics 

Annual Reports of the Treasurer of the Teachers' Pen- 
sion Fund, 1912, 1913, 1914 and 1915. (4-page leaf- 
lets.) 
For a history and criticism of this fund, see p. 207. 
Dayton — (See note under Ohio) 
Reports and pamphlets 

Annual Report of the Secretary of the Board of Trustees 
of the Fund. 4-page leaflet, receipts and disbursements 
for the years 1913 and 1914. 
336 



Appendices 

Norwood — (See note under Ohio) 
Reports and statistics 

School Teachers' Pension Fund. In Report of the Publ. 
School of Norwood, 19 14. p. 56-57 (Reports of re- 
ceipts and disbursements for the years 1913-1914). 
Springfield — (See note under Ohio) 
Reports and statistics 

Pension Trustees. Reports 1909-19 15. 2-p. leaflets. 
Receipts and disbursements, list of contributors. 
Toledo — (See note under Ohio) 
Laws 

School Teachers' Pension Law. Rules and regulations as 
amended in 1910, 16 p. 
Reports and statistics 

Board of Trustees of the School Teachers' Pension Fund. 
Statement, October i, 1914, 3 p. 

OREGON '; 

Laws 

Gen. Sess. Laws 1911, ch, 280. 

Permissive for districts having more than 10,000 chil- 
dren of school age to establ. retir. funds; reprint, in 
School Laws 191 1, p. 114. 
1913, ch. 58. 

Increasing contribution of the District Bd. of Ed. from 
I per cent to 3 per cent of school taxes. 
See under Portland, Oregon. 
Portland Teachers' Retirement Fund Association. 
Established 1912. 
Number of Teachers, 525. Contributory. 
Lows: See under Oregon. 

Articles of Incorporation and By-Laws. Teachers' Re- 
tirement Fund Association, District No. i, Multnomah 
Count3^ March 12, 1914, 21 p. 
Reports and statistics 

Statement of Retir. Fund. Assn. 1912-1916. 2 type- 
written pages. Receipts and disbursements. 
Descriptions 

Comm. Ed. v. i, p. 99. (Describes law 191 1.) 
Analysed in comparative charts: VII (1911); VIII and 

ix (1913). 

337 



Teachers' Pension Systems in the United States 

PENNSYLVANIA 
Pennsylvania Public School Teachers' and Em- 
ployees'^ Retirement System. Established 191 7. 
Number of Teachers, 31,740. Contributory. 
Laws 

Sess. Laws 1905, ch. 186, sec. 6, April 22. 

Permissive for ist class districts; reprint, in N. Ed. 
Assn. p. 314. 
1907, ch. 169, May 23. 

Permissive for 2d class and 3d class districts. 
191 1, ch. 191, Art. XXIV, May 18. 
Permissive for any district reprint, in Sch. L. 19 11. 
Art. XXIV, p. 114; in N. Ed. Assn. p. 317. 
19 1 7 (setablishing a state-wide system). 
Descriptions 

Carn. Found. 1915, p. 47-48. (Describes and criticises 

bill 191 5.) 
Comm. Ed. 1907, v. i, p. 451-456. 

Describes law 1909 and pens, bill of teachers' assn. 
Herrick, Cheesman A. Teachers' Retirement Fund. In 

Penn. School Jo. 191 1, p. 305-8. 
Jones, Adison L. Need of retirement fund for teachers. 
In Penn. School Jo. May 1908, p. 529-532. 
Analyzed in comparative charts: (1911) VII, VIII. 
For a history and criticism of this fund, see p. 265. 
Altoona Teachers' Retirement Fund. Established 1913. 
Number of Teachers, 260. Contributory. 
Laws: See Under Pennsylvania, Law 191 1. 
Chester Teachers' Retirement Fund. Established 1913. 
Number of Teachers, 189. Contributory. 
Laws and reports 

Manual of Public Schools of Chester, Pa. 191 5-16, p. 
129-132, 13, 15. Text of law and by-laws; financial 
report. 
Erie Teachers' Retirement System, under approval of the 
Bd. in 1916. 
Number of Teachers, 365. Contributory. 
Laws 

Rules of the Teachers' Retirement System of Erie, June 
1916. Galley proof. 

^Employees included teachers and other employees. 



Appendices 

Harrisburg Teachers' Retirement Fund. Established 

1908. 
Number of Teachers, 335. Contributory. 
Laws 

Retirem. Fund Plan and By-Laws. 1908, 10 p. 
Descriptions 

Comm. Ed. 1909, v. i, p. 119. (Brief description). 
Analyzed in comparative charts: III, IV, IX. 

Lancaster Teachers' Retirement" Fund Association. 
Established 1914. 
Number of Teachers, 171. Contributory. 
Laws 

By-Laws and Retirement Fund Plan. 1912, ii-p. book- 
let. Contains also amendments. 

Philadelphia Teachers' Retirement Fund. Established 
1907. _ 
Number of Teachers, 5,895. Contributory. 
Laws 

Retirement Plan and By-Laws, ist District of Pennsyl- 
vania. 1907, 16 p. 
Laws and By-Laws. In Retirement Board, 9th annual 
report, 191 5. 
Reports and statistics 

Retirement Board. Annual report for the years 191 5 
and 1916, 30 p. Contains a description of the benefits, 
development and condition of the fund ; statistical and 
graphic charts showing the increase of expenditures. 
— Actuary's report on the condition of the fund June, 
1918. 51 p. (estimate of assets and liabilities, and 
rates of contributions required on a solvent basis). 
— Series of Questions and Answers. November, 1918. 
28 p. (a discussion of changes necessary to insure the 
solvency of the systems). 
Descriptions 

Comm. Ed. 1894-95, v. i, p. 1086-92. 

Report of the T. Annuity Aid Assn. (private fund) 
est. in 1890; its constitution and amendments. 
Analyzed in comparative charts III, IV, VIII, IX. 
For a history and criticism of this fund, see p. 203. 

339 



Teachers' Pension Systems in the United States 

Pittsburgh Teachers' Retirement Association.^ Estab- 
lished 1912. 
Number of Teachers, 2,405. Non-contributory. 
Descriptions 

Board of Educ. of Pittsburgh, ist annual report 1912, 
p. 142-44. Briefly describes pens, system; justifies it 
on the ground of underpaid work. 
Analysed in comparative charts III, IV, IX. 
For a history and criticism of this association, see p. 166. 
Reading Teachers' Retirement Fund. EstabHshed 191 3. 
Number of Teachers, 389. Contributory . 
Laws 

Rules and Regulations of the Teachers' Retirement Fund. 
School District of Reading, 4 p. 
Reports and statistics 

Teachers' Retirement Board of Reading, ist and 2nd 
annual reports 1914-1915. Two lo-page pamphlets. 
Receipts and disbursements; annuity list; the report 
claims that "the fund is in sound condition." 
Scranton Teachers' Retirement Fund. Estabhshed 19 11. 
Number of Teachers, 664. Contributory. 
Laws 

Retirement Plan and By-Laws. Scranton, Pa. 1912, 
8 p. 
Analysed in comparative charts: IX. 
Wilkes-Barre Teachers' Retirement Fund. Established 
1910. 
Number of Teachers, 314. Contributory, 
Lazvs 

Retirement Law and By-Laws. In Report of the Public 
Schools of the Wilkes-Barre City School District, 
1915, p. 48-52. 

RHODE ISLAND 
Rhode Island Teachers' Pension System. Established 
1907. 

1 A bill for a contributory pension system for the teachers of Pittsburgh 
is now under consideration of the legislature. The basis of the proposed 
system is as follows : Contributions by teachers i per cent, to 3 per cent, 
sal. total contributions max. $1,500. City contributions min. i^ of the 
teachers' contributions or as much as is necessary to pay pensions. Pen- 
sions after 30 years' service on superintendent's recommendation, after 
40 years automatically (min. 15 years in city), or after 20 years on dis- 
ability. Amount $600 after 40 years, $500 after 30 years, proportionately 
less below 30 years. Refund all own contributions at dismissal; no refund 
at resignation or upon death (see Carnegie Report, IQIS)- 

340 



Appendices 

Number of Teachers, 2,'jyT^. Non-contributory. 
Laws 

Acts and Res. 1907, ch. 1468, Apr. 23. 

Establ. state-wide system; reprint, in Com. Ed. 1907, 

p. 450; in Bur. Ed. Bull, p. 164. 

1909, ch. 401, Apr. 29, -amendm. 

Age requirement repealed, reprint, in School Laws 

1910. p. 27 and 94;. in N. Ed, Assn. p. 317. 

19 14, ch. 1090,'May 6 (adding disability provision). 

1915, ch. i2i4,Apr.. 22. (No material changes.) 
Reports and statistics 

Statement of Teachers' Pensions for Quarter, ended Dec. 
31, 191 5. I page typewritten leaflet. 
Number of pensions, average pension, total expendi- 
ture, etc. 
Descriptions 

Comm. Ed. 1909, v. i, p. 119. (Describes amendm. 

1909.) 
Cam. Eound. 19 12, p. 27. 

Describes act 1907; disbursements. 
Analyzed in comparative charts: III-VI, VII (1910); IX 
(1914). 
Bristol Teachers' Retirement Fund. Established 1914. 
Number of Teachers, 52.^ Contributory. 
Laws ' 

Gen. Assembly Acts 1914, April 13. 

Establ. Retirement Fund in Bristol, reprinted by the 
Bd. of Ed. of Bristol, 3 mimeogr. pages. 
Newport Teachers' Retirement Fund. Established 1898. 
Number of Teachers, 155.^ Contributory. 
Laws 

1898, May 6. In the R. I. Supt. of Schools, Report 1912 
(?) p. 85-86 (incorporating the fund). 
Reports and statistics 

Teachers' Retirement Fund. In R. I. Supt. of Schools 
Report 1912 (?) p. 81-85. 

Report on the receipts and disbursements; benefits re- 
duced from Yz to y4 sal. 
Providence Teachers' Retirement Fund.^ Established 
1897. 

*The teachers of Bristol, Newport and Providence are also covered by 
provisions of the Rhode Island systems. 



Teachers' Pension Systems in the United States 

Number of Teachers, 1,082. Contributory. 

Laws 

Pub. Sess. Acts. 1897, ch. 485, May 21. 
Establ. Retir. Fund in Providence. 

Reports and statistics 

The Publ. School Teachers Retirement Fund in Provi- 
dence. Extract from report of R. J. Condon. 19 10, 
II -p. pamphlet. 

Describing the development of the fund, its unsatis- 
factory financial condition and the prorating of pen- 
sions. 

Analyzed in comparative charts: IV, VII-IX. 

SOUTH CAROLINA 

Laws: See under Charleston. 
Charleston Teachers' Retirement Fund. Established 
1898. 
Number of Teachers, 157. Non-contributory. 
Laws 

Acts 1898, No. 544, Jan. 29. 

Permissive for Charleston to establish a retirement 
fund. 
Descriptions 

Comm. Ed. 1898-99, v. 2, p. 1480 (describing law 1898). 
1903-04, V. 2, p. 2285 (brief note). 
Analyzed in comparative charts: III, IV, VII-IX. 

UTAH 
Utah Teachers' Retirement Fund. Established 19 13. 
Number of Teachers, 2,511. Contributory. 
Laws 

Sess. LawS'1907^ ch. II, Mar. 14. 

Permissive for cities of ist and 2nd cl. or any country 
to establish pens. assn. ; reprint, in Sch. Laws, 191 1, 
p. 113; in Bur. Ed. Bull. p. 165-67; in N. Ed. Assn., 
p. 317-320. 
1913, ch. 91; Mar. 20. 

Establ. a state fund consisting of a current and a per- 
manent fund, which any city or district may join if the 
majority of teachers favor it; amending the pens, law 
regarding ist class cities. 

342 



Appendices 

Descriptions 

Carn. Found. 1912, p. 36 (describes law 1907). 
1914, p. 32 (describes law 1913). 
Analysed in comparative charts: IV, VII (1907); VIII, 

IX (1913)- ^ ^ 

Salt Lake City Teachers' Retirement Fund. Estab- 
lished IQ09. 
Number of Teachers, 694. Contributory. 
Laws: See under Utah; laws 1907 and "1913. 
Analyzed in comparative charts: III, IV, IX. 
VERMONT 
Vermont Teachers' Retirement Fund Association. 
Established 1913.^ 
Number of Teachers, 2,992. Contributory. 
Laws 

Sess. Laws 1910, No. 66," Jan. 26. 

Permissive" for any town or district to pay pension, 
repr. in N. Ed. Assn., p. 320. 
191 2, No. 70, Jan. 29. 
Establ. a state-wide system. 
Descriptions > 

Comm. Ed. 191 1, v. i, p. 98 (describes law 1910). 
Carn. Found., 19 14, p. 32 (describes law 1912). 
Reports and statistics 

Vermont Teachers' Retirement Fund Association, 2-p. 
leaflet. 19 16. Appeal to the teachers to raise money 
for the fund. 
Carnegie Found. Bulletin 12, 1918. p. 30-35. Suggested 
System of Retirement Allowances (outline of the pro- 
posed plan, its theory and statistical basis). 
Analyzed in comparative charts: IV, IX. 

VIRGINIA 
Virginia Retired Teachers' Fund. Established 1908. 
Number of Teachers, 13,120. Contributory. 
Laws 

Sess. Acts 1908, ch. 313, Mar. 14. 

State-wide, reprint, in Bd. Ed. Bull. p. 167-169. 
1910, ch. 97, Mar. 9 (amending law 1908). 
1912, ch. 329, Mar. 15. 

iSee Chapter XVIII and Appendix 3 (g) regarding a new law enacted 
in April, 1919. 

343 



Teachers' Pension Systems in the United States 

Supplem. L. re disability and reentering the service; 
reprint, in N. Ed. Assn., p. 320-324." 
State Bd. of Educ, Teachers' Retir, Fund, 7 p. 
Acts 1908, 1910, 1912. 
Reports and statistics 

Binford, J. H. Some facts concerning the retired teach- 
ers' fund; an article in the Virginia Journal of Educa- 
tion, June 1911, p. 593-95. 
Receipts and disbursements, July 1914-15, i mimeogr. 
page. 
Descriptions 

Comm. Ed. 1908, v. i, p. 104 (describes L. 1908). 
1909, V. I, p. 119 (explanatory note). 
1912, V. I, p. 66 (describes amend. 1912). 
Carn. Found. 1912, p. 26 (describes fund's condition). 
Analyzed in comparative charts: III, IV, VI-IX. 
For a history and criticism of this fund, see p. 198. 
WASHINGTON 
Senate Bill, 131, ch. 48, acts 19 13 (defeated). 
Descriptions 

Cam. Found. 1914, p. 33. 
Describes defeated pens. bill. 
Analyzed in comparative charts: VIII (Pens. bill). 
WISCONSIN 
Wisconsin TeachersMnsurance and Retirement Fund. 
Established 191 1. 
Number of Teachers, 14,597. Contributory. 
Laws 

For laws prior to 1911, see under Milwaukee. 
Sess. Laws, 191 1, ch. 323, June 10. 

State-wide, repr. in N. Ed. Assn.. p, 324-328. 
191 1, ch. 664, amendment. 
Rules and Regulations, Law 19X5, p6-p. booklet. 
Reports and statistics 

Statement of the Teachers' Insur. and Retir. Fund. 
5-p. mimeographed copy (Receipts and disbursements 
for the years 1912-1915). 
Reports of the Secretary of the Bd. of Trustees, 1914, 
5-p. mimeographed copies (membership, pension roll^ 
average annuities, etc.) 
Descriptions 

Carn. Found. 1912, p. 27. (Describes law 191 1.) 

344 



Appendices 

Borden, J. B., The problem of teachers' pensions in Wis- 
consin. In Wise. Jo. of Educ. Feb and Mar. 191 1, p. 
35-37. 64-66. 
Comm. Ed. 1907, v. i, p. 451 (describes law 1907). 

191 1, V. I, p. 97 (describes law 191 1). 
Herfurth, Elizabeth M. The teachers' fund movement. 
In Wise. Teachers' Assn. Proceedings 1909, 19 10, 
p. 204-17. 
Analyzed in comparative charts III, VII-IX. See also 

under Milwaukee. 
For a history and criticism of this fund, see p. 193. 
Milwaukee Teachers' Retirement Fund. Estabhshed 
1907. 
Number of Teachers, 1,691. Contributory. 
Laws 

Sess. Laws 1907, ch. iii. Mar. 14, creating sec. 925-XX 
of the statute. 

Establ. in pension fund, in Milwaukee;; reprint, in 
Bur. Ed. Bull. p. 169-71. 
1909, ch. 510, June 16. 

Abolishing city's contribution of i per cent of school 
tax; substituting new law for the old law. 
Sess. Laws 191 1, ch. 189, May 25 amending L. 1909. 
Authorizing a city contribution of i per cent of school 
tax, max. amount equal to teachers' contributions. 
Descriptions 

Comm. Ed. 1907, v. i, p. 451. 

Describes law 1907; question of compulsion. 1909, 
V. I, p. 120 (describes law 1909). 
Analysed in comparative charts: IV, VII (1909); VIII, 

ix (1911). 

Reports and statistics 

Law 1909-1911. Retirement fund in cities of ist class. 

(A two-page leaflet.) 
Secretary of the Board of Trustees. Report for the year 

1915- 

Five-page mimeographed copy. 

Membership, pension roll, average annuity, etc. 

WYOMING 

Descriptions 

Carn. Found. 1914, p. 34. 

Agitation for pens, legislation. 

345 



APPENDIX 3 

LAWS PROVIDING FOR SOUND TEACHERS' 
PENSION SYSTEMS 

(a) Massachusetts 

Acts of 1913, Chapter 832.— An Act to EstabUsh a Retirement 
System for Public School Teachers 

CONSTRUCTION 

Section i. The following words and phrases as used in this act, un- 
less a different meaning is plainly required by the context, shall have the 
following meanings : 

(i) "Retirement system" shall mean the arrangement provided in 
this act for payment of annuities and pensions to teachers. 

(2) "Annuities" shall mean payments for life derived from con- 
tributions from teachers. "Annuities-certain" shall mean payments for a 
definite number of years only, derived from contributions from teachers, 
and the number of years during which the payments shall be made shall 
be determined by the retirement board. {As amended by chapter 233, 
General Acts of 1917.) 

(3) "Pensions" shall mean payments for life derived from contribu- 
tions from the commonwealth. 

(4) "Teacher" shall mean any teacher, principal, supervisor or super- 
intendent employed by a school committee, or board of trustees, in a 
public day school within the commonwealth. 

(5) "Public school" shall mean any day school conducted within 
this commonwealth under the order and superintendence of a duly- 
elected school committee and also any day school conducted under tht 
provisions of chapter four hundred and seventy-one of the acts of th» 
year nineteen hundred and eleven. 

(6) "Regular interest" shall mean interest at the rate determined 
by the retirement board and shall be substantially that which is actually 
earned, which shall be compounded annually on the last day of December 
of each year. {As amended by clmpter 23/, General Acts of ip7(5.) 

(7) "Retirement board" shall mean the teachers' retirement board, 
as provided in section four of this act. 

(8) "Retirement association" shall mean the teachers' retirement 
association, as provided in section three of this act. 

(9) "Expense fund" shall mean the fund provided for in paragraph 
numbered one in section five of this act. 

(10) "Annuity fund" shall mean the fund provided for in paragraph 
numbered two in section five of this act. 

(11) "Pension fund" shall mean the fund provided for in paragraph 
numbered three in section five of this act. 

(12) "School year" shall mean the twelves months from the first day 
of July of any year to the thirtieth day of June next succeeding. 

(13) "Assessments" shall mean the annual payments to the annuity 
fund by members of the association. 



Appendices 



ESTABLISHMENT OF A TEACHERS RETIREMENT SYSTEM. 

Section 2. A teachers' retirement system shall be established on the 
first day of July, nineteen hundred and fourteen. 

teachers' RETIREMENT ASSOCIATION 

Section 3. A teachers' retirement association shall be organized 
among the teachers in the public schools as follows : 

(i) All teachers, except those specified in paragraph (3) of this 
section, who enter the service of the public schools for the first time 
on or before July first, nineteen hundred and fourteen, shall become 
thereby members of the association. 

(2) All teachers, except those specified in paragraph (3) of this 
section, who shall have entered the service of the public schools before 
June thirtieth, nineteen hundred and fourteen, may at any time between 
July first, nineteen hundred and fourteen, and September thirtieth, nine- 
teen hundred and fourteen, upon application in writing to the commis- 
sioner of education, become members of the retirement association. 
Any teacher failing to do so may thereafter become a member of the 
retirement board by paying an amount equal to the total assessments, 
together with regular interest thereon, that he would have paid if he 
had joined the retirement association on September thirtieth, nineteen 
hundred and fourteen. 

(3) Teachers in the service of the public schools of the city of 
Boston shall not be included as members of the retirement association.' 

STATE teachers' RETIREMENT BOARD 

Section 4. (i) The management of the retirement system is hereby 
vested in the teachers' retirement board, consisting of seven members: 
the insurance commissioner for the commonwealth, the bank commis- 
sioner for the commonwealth, the commissioner of education for the 
commonwealth, three members of the retirement association and one other 
person. Upon organization of the retirement association the members 
thereof shall elect from among their number in a manner to be approved 
by the insurance commissioner, the bank commissioner and the commis- 
sioner of education, three persons to serve upon the retirement board, one 
member to serve for one year, one for two years and one for three 
years, and thereafter the members of the retirement association shall 
elect annually from among their number in a manner to be approved 
by the retirement board one person to serve upon the retirement board 
for the term of three years. The seventh member of the reitrement 
board shall be elected annually by the other six to serve for the term of 
one year. On a vacancy occurring on the board, a successor of such 
person whose place has become vacant shall be chosen in the same 
manner as his predecessor to serve until the next annual election. Until 
the organization of the retirement association and the election of three 
representatives therefrom, the insurance commissioner, the bank com- 
missioner and the commissioner of education shall be empowered to 
perform the duties of the retirement board. 

(2) The members of the retirement board shall serve without com- 
pensation, but they shall be reimbursed from the expense fund of the 
retirement association for any expenditures or loss of salary or wages 
which they may incur through serving on the board. All claims for 

^Modified for industrial and continuation school teachers, by chapter 
494, Acts of 1914. 



347 



Teachers' Pension Systems in the United States 

reimbursement on this account shall be subject to the approval of tht 
governor and council. 

(3) The retirement board shall have power to make by-laws and 
regulations not inconsistent with the provisions of this act; and to 
employ a secretary who shall give a bond in such amount as the board 
shall approve and clerical and other assistance as may be necessary. 
The salaries shall be fixed by the board, with the approavl of th« 
governor and council. 

(4) The retirement board shall provide for the payment of retirement 
allowances and such other expenditures as are required by the provisioni 
of this act. 

(5) The retirement board shall adopt for the retirement system one 
or more mortality tables, and shall determine what rates of interest shall 
be established in connection with such tables, and may later modify such 
tables or prescribe other tables to represent more accurately the expense 
of the retirement system or may change such rates of interest, and may 
determine the application of the changes made. 

(6) The retirement board shall perform such other functions as art 
required for the execution of the provisions of this act. 



CREATION OF FUNDS 

Section 5. The funds of the retirement system shall consist of an 
expense fund, an annuity fund and a pension fund. 

(i) The expense fund shall consist of such amounts as shall be appro- 
priated by the general court from year to year on estimates submitted 
by the retirement board to defray the expense of the administration of thii 
act, exclusive of the payment of retirement allowances. 

(2) The annuity fund shall consist of assessments paid by members 
of the retirement association, and interest derived from investments of 
the annuity fund. Each member of the retirement association shall pay 
into the annuity fund, by deduction from his salary in the manner 
provided in section nine, paragraph five, of this act, such assessments 
upon his salary as may be determined by the retirement board. The rate 
of assessment shall be established by the retirement board on the first day 
of July of each year after a prior notice of at least three months, and 
shall at any given time be uniform for all members of the retirement 
association, and shall not be less than three per cent nor more than seven 
per cent of the member's salary : provided, however, that when the total 
sum of assessments on the salary of any member at the rate established 
by the retirement board would amount to more than one hundred dollar* 
or less than thirty-five dollars for any school year, such member shall in 
lieu of assessments at the regular rate be assessed one hundred doUarj 
a year or thirty-five dollars a year as the case may be, payable in equal 
instalments to be assessed for the number of months during which the 
schools of the community in which such member is employed are com- 
monly in session. Any member of the retirement association who shall 
for thirty years have paid regular assessments to the annuity fund as 
provided herein, shall be exempt from further assessments ; but such 
member may thereafter, if he so elects, continue to pay his assessments 
to the fund. No member so electing shall pay further assessments after 
the total sum of assessments paid by him shall at any time have amounted, 
with regular interest, to a sum sufficient to purchase an annuity of five 
hundred dollars at age sixty; and interest thereafter accruing shall be 
paid to the member at the time of his retirement. 

(3) The pension fund shall consist of such amounts as shall be 
appropriated by the general court from time to time on estimates sub- 



348 



Appendices 

mitted by the retirement board for the purpose of paying the pcnsiont 
provided for in this act. 

(4) ^Members of the retirement association,^ established by chapter 
five hundred and thirty-two of the acts of the year nineteen hundred and 
eleven, as amended, who enter the service of the public schools shall have 
the full amount of their contributions, together with such interest as 
shall have been earned thereon, transferred by the treasurer of the 
commonwealth to the annuity fund established by paragraph (2) of this 
section, and these amounts shall thereby become a part of their assess- 
ments. 

PAYMENT OF RETIREMENT ALLOWANCES 

Section 6 (i) Any member of the retirement association may retire 
from service in the public schools on attaining the age of sixty years, or at 
any time thereafter, if incapable of rendering satisfactory service as a 
teacher, may, with the approval of the retirement board, be retired by 
the employing school committee. 

(2) Any member of the retirement association, on attaining the age 
of seventy years, shall be retired from service in the public schools. 

(3) A member of the retirement association after his retirement 
under the provisions of paragraphs numbered (i) or (2) of this section, 
shall be entitled to receive from the annuity fund, as he shall elect at 
the time of his retirement, on the basis of tables adopted by the retire- 
ment board: — (a) an annuity, payable in quarterly payments, to which 
the sum of his assessments under section five, paragraph (2), with regular 
interest thereon, shall entitle him; or, (b) an annuity of less amount, 
as determined by the retirement board for the annuitants electing such 
option, payable in quarterly payments, with the provision that if the annu- 
itant dies before receiving payments equal to the sum of his assessments 
under section five, paragraph (2), with regular interest, at the time of 
his retirement, the difference between the total amount of said payments 
and the amount of his contributions with regular interest shall be paid to 
his legal representatives. 

(4) Any member of the retirement association receiving payments 
of an annuity as provided in paragraph numbered (3) of this section 
shall, if not rendered ineligible therefor by the provisions of section twelve 
of this act, receive with each quarterly payment of his annuity an equal 
amount to be paid from the pension fund as directed by the retirement 
board. 

(5) Any teacher who shall have become a member of the retirement 
association under the provisions of paragraph numbered (2) of section 
three, and who shall have served fifteen years or more in the public 
schools of the commonwealth, not less than five of which shall imme- 
diately precede retirement, shall, on retiring as provided in paragraphs (l) 
and (2) of this section, be entitled to receive a retirement allowance as 
follows: (a) such annuity and pension as may be due under the pro- 
visions of paragraphs numbered (3) and (4) of this section; (b) an 
additional pension to such an amount that the sum of this additional pen- 
sion and the pension provided in paragraph (4) of this section shall 
equal the pension to which he would have been entitled under the pro- 
visions of this act if he had paid thirty assessments on his average 
yearly wage for the fifteen years preceding his retirement and at the 
rate in effect at the time of his retirement: provided, (i) that if his term 
of service in the commonwealth shall have been over thirty years the 
thirty assessments shall be reckoned as havmg begun at the time of his 

^As amended by chapter 197, General Acts of 1915. 

'^The Retirement System established for State employees. 

349 



Teachers' Pension Systems in the United States 

entering service and as drawing three per cent interest compounded 
annually until the time of retirement; and further provided, (2) that if 
the sum of such additional pension together with the annuity and pension 
provided for by paragraphs numbered (3) and (4) of this section is 
less than three hundred dollars in any one year, an additional sum suffi- 
cient to make an annual retirement allowance of three hundred dollars 
shall be paid from the pension fund. {As amended by chapter 257, Gen- 
eral Acts of 1916.) 

(6) If at any time it is impossible or impracticable to consult the 
original records as to wages received by a member during any period, 
the retirement board shall determine the pension to be paid under para- 
graph numbered (5) (b) of this section in accordance with the evidence 
they may be able to obtain. 

(7) ^In determining the retiring allowance of a member of the teachers' 
retirement association who prior to the first day of June, nineteen hundred 
and twelve, had been regularly employed by the commonwealth, credit 
shall be given in the manner provided for by paragraph (5) of this 
section, for all such periods of employment rendered prior to the first 
day of June, nineteen hundred and twelve : provided, hozvever, that this 
paragraph shall not apply to any person becoming a member of the 
teachers' retirement association, after the first day of July, nineteen 
hundred and fifteen, who, at the time of entering the service of the 
public schools, was not a member of the retirement association established 
by chapter five hundred and thirty-two of the acts of the year nineteen 
hundred and eleven. 

(8) Any member of the retirement association who has served twenty 
or more years in the public schools of the commonwealth and who, 
before attaining the age of sixty, by reason of physical or mental dis- 
ability, becomes permanently incapable of rendering satisfactory service 
as a teacher, may, with the approval of the retirement board, be retired 
by the employing school committee : provided, that he has served in the 
public schools of the commonwealth for the five consecutive years imme- 
diately preceding the date of his retirement. Periods of leave of absence 
or sickness shall not be considered as breaking the continuity of the 
five consecutive years of service required by the provisions of this 
paragraph, but such periods of absence or sickness shall not be counted 
as service. (Added by chapter 233, General Acts of 1917.) 

(9) Any member of the retirement association shall, upon retirement 
under the provisions of paragraph (8) of this section, and during the 
continuance of disability, be entitled to receive from the annuity fund, 
in quarterly payments, a sum computed in accordance with the pro- 
visions of paragraph (3) of this section: provided, that upon the approval 
of the retirement board, an annuity-certain based upon the tables of the 
board may be substituted for either of the plans provided for in said 
paragraph, and in case of the death of the annuitant before all the 
instalments-certain have been paid, the value at that time of the unpaid 
instalments, as determined on the basis of the tables adopted by the 
retirement board, shall be paid to the legal representatives of the deceased 
member's estate; and further provided, that if no executor or adminis- 
trator of the estate of such deceased member is appointed within three 
months after his death, all sums due under this paragraph, not exceeding 
one hundred dollars in any one case, may be paid to such person or persons 
as appear in the judgment of the retirement board to be entitled to the 
proceeds of the estate, and such payment shall be a bar to recovery 
by any other person. (Added by chapter 233, General Acts of 1917.) 

(10) Any member of the retirement association receiving a payment 
^As amended by chapter 197, General Acts of 1915- 



Appendices 

as provided in paragraph (9) of this section, shall, if not rendered 
ineligible therefor by the provisions of section tvi^elve of this act, be 
entitled to receive from the pension fund for each year of service a 
pension equal to one-thirtieth of the pension vi?hich would have been 
due him under the provisions of this act if he had retired at the age 
of sixty, having paid thirty annual assessments to the annuity fund, and 
received an annuity computed in accordance with the provisions of para- 
graph (3), option (a) of this section; provided, hozweer, that the mini- 
mum annual amount to be paid from the pension fund shall be such that a 
member shall receive from this fund, for each year of his service, one- 
thirtieth of two hundred and fifty dollars; and further provided, that the 
total retiring allowance shall in no case be greater than the amount 
which the said member would receive if he were to continue in service 
until the age of sixty, contributing annual assessments based on the 
average salary received during the five years of service immediately 
preceding retirement, at the rate of assessment in effect at the time 
of retirement. {Added by chapter 233, General Acts of 1917.) 

(11) If a member is granted an annuity-certain by the retirement 
board, his total retiring allowance shall not be limited to the total retiring 
allowance which he would have received at the age of sixty, as provided 
in paragraph (10) of this section, but the amount to be paid from the 
pension fund shall be the amount which would have been paid from that 
fund if an annuity-certain had not been granted. (Added by chapter 233, 
General Acts of 1917.) 

(12) In computing the amount to be paid from the pension fund 
under the provisions of paragraph (10) of this section, the assumed 
assessments necessary to complete the thirty annual assessments shall be 
based on the average salary received during the five years of service 
immediately preceding retirement, and shall be at the rate of assessment 
in efi^ect at the time of retirement. Interest on the amount to the mem- 
ber's credit at the time of retirement and on the assumed assessments 
shall be figured at the rate of three per cent. (Added by chapter 233, 
General Acts of 1917.) 

(13) No member of the retirement association shall be retired under 
the provisions of paragraph (8) of this section until the fact of his 
disability has been certified to under oath by an examining physician 
selected by the employing school committee and approved by the retire- 
ment board, and until any further evidence of his disability which the 
retirement board may require shall have been furnished. (Added by 
chapter 233, General Acts of 1917.) 

(14) At intervals of not less than one year, any member of the 
retirement association receiving a retiring allowance under the provisions 
of this section, who has not attained the age of sixty, shall, if so re- 
quested by the retirement board, be re-examined by a physician selected 
by the retirement board. If the retirement board finds that disability 
which prevents satisfactory service as a teacher no longer exists, the 
retiring allowance shall cease. Refusal to submit to re-examination shall 
be cause for discontinuing the retiring allowance. (Added by chapter 233, 
General Acts of 1917.) 

(15) If a teacher ceases to receive a retiring allowance under the 
provisions of paragraph (14) of this section, the amount of his credit at 
that time in the annuity fund shall be determined on the basis of tables 
adopted by the retirement board, and the said amount shall be considered 
for the purposes of this act to constitute the sum of his assessments, with 
the regular interest allowed thereon, to the time when his retiring allow- 
ance ceased. (Added by chapter 233. General Acts of 1917. 

(16) Any member of the retirement association who shall cease to 



Teachers' Pension Systems in the United States 

receive a retiring allowance under the provisions of paragraph (14) of 
this section, who does not reenter the service of the public schools, and 
who does not withdraw the amount to his credit in the annuity fund, 
may, upon attaining the age of sixty, receive a retiring allowance com- 
puted in accordance with the provisions of paragraphs (3) and (4) of this 
section, or may before attaining the age of sixty, under conditions to be 
determined by the retirement board, upon request and after an interval 
of one year, be entitled to further re-examination by a physician selected 
by the retirement board, and if disability contracted during service as a 
public school teacher is found to exist, shall again be entitled to receive 
a retiring allowance under the provisions of paragraphs (9) and (10) 
of this section. (Added by chapter 233, General Acts of 1917.) 

WITHDRAWAL AND REINSTATEMENT 

Section 7.^ (i) Any member of the retirement association withdraw- 
ing from service in the public schools, except for the purpose of entering 
the service of the commonwealth, before becoming eligible to retirement 
shall be entitled to receive from the annuity fund all amounts contributed 
as assessments, together with regular interest thereon, in the manner 
hereinafter provided. 

(2) If such withdrawal shall take place before six annual assessments 
have been paid, the total amount to which such member is entitled as 
determined by the retirement board under the provisions of this act may 
be paid to him in one sum. (As amended by chapter 60, General Acts' 
of 1916.) 

(3) If such withdrawal shall take place after six annual assessments 
have been paid the amount so refunded shall be in the form of such 
annuity for life based on the contributions of such member, together with 
regular interest thereon, as may be determined by the retirement board 
according to its annuity tables, or in four annual instalments, as such 
member may elect. (As aviendcd by chapter 60, General Acts of 1916.) 

(4) If a member of the association withdrawing and receiving pay- 
ments in accordance with paragraphs numbered (2) and (3) of this 
section, shall die before the amount of such payments equals the amount 
of his contributions to the annuity fund with regular interest, the differ- 
ence between the amount of such payments and the amount of his con- 
tributions with regular interest shall be paid to his legal representatives. 

(5) Any member of the retirement association who shall have with- 
drawn from service in the public schools shall, on being re-employed in 
the public schools, be reinstated in the retirement association in accord- 
ance with such plans for reinstatement as the retirement board shall adopt. 

(6) If a member of the retirement association shall die before retire- 
ment, the full amount of his contributions to the annuity fund with regu- 
lar interest to the day of his death shall be paid to his legal repre- 
sentatives; if, however, there is no executor or administrator of the 
estate of such deceased member, all sums due under this paragraph, not 
exceeding one hundred dollars in any one case, may be_ paid to such 
person or persons as appear in the judgment of the retirement board 
to be entitled to the proceeds of the estate, and such payment shall be a 
bar to recovery by any other person. (As amended by chapter 238, Gen- 
eral Acts of 1916.) 

TAXATION, ATTACHMENTS AND ASSIGNMENTS 

Section 8. That portion of the salary or wages of a member deducted 
or to be deducted under this act, the right of a member to an annuity or 

^As amended by chapter 198, General Acts of 1915. 



Appendices 

pension, and all his rights in the funds of the retirement sysetm shall be 
exempt from taxation, and from the operation of any laws relating to 
bankruptcy or insolvency, and shall not be attached or taken upon execu- 
tion or other process of any court. No assignment of any right in, 
or to, said funds shall be valid. The funds of the retirement system, so 
far as invested in personal property, shall be exempt from taxation.^ 

DUTIES OF THE SCHOOL COMMITTEE 

Section 9. (i) The school committee of each town and city in the 
commonwealth shall, before employing in any teaching position any person 
to whom this act may apply, notify such person of his duties and obli- 
gations under this act as a condition of his employment. 

(2) On or before October first of each year the school committee of 
each town and city in the commonwealth shall certify to the retirement 
board the names of all teachers to whom this act shall apply. 

(3) The school committee of each town and city in the common- 
wealth shall, on the first day of each calendar month, notify the retire- 
ment board of the employment of new teachers, removals, withdrawals, 
changes in salary of teachers, that shall have occurred during the month 
preceding. 

(4) Under the direction of the retirement board the school committee 
of each town or city in the commonwealth shall furnish such other infor- 
mation as the board may require relevant to the discharge of the duties 
of the board. 

(5) The school committee of each town and city in the commonwealth 
shall, as directed by the retirement board, deduct from the amount of the 
salary due each teacher employed in the public schools of such city or 
town such amounts as are due as contributions to the annuity fund as 
prescribed in this act, shall send to the treasurer of said town or city a 
statement as voucher for such deductions, and shall send a duplicate 
statement to the secretary of the retirement board. 

(6) The school committee of each town and city in the common- 
wealth shall keep such records as the retirement board may require. 

DUTIES OF BOARDS OF TRUSTEES 

Section 10. In administering this act for the benefit of teachers in 
schools conducted in accordance with chapter four hundred and seventy- 
one of the acts of the year nineteen hundred and eleven, the boards of 
trustees of said schools are hereby authorized and required to perform 
all the duties prescribed for school committees under this act. 

CUSTODY AND INVESTMENT OF FUNDS 

Section 11. (i) The treasurer of each town or city in the common- 
wealth on receipt from the school committee or board of trustees of the 

^Any pledge, mortgage, sale, assignment, or transfer hereafter made 
of any right, claim, or interest in any pension which has been, or may 
hereafter be granted by the commonwealth or by any county, city or 
town, shall be void and of no effect, and any person who shall be a party 
to such pledge, mortgage, sale, assignment or transfer of any right, 
claim, or interest in any pension, or pension certificate, which has been 
or may hereafter be granted or issued by the commonwealth or by any 
county, city or town, or who shall hold the same as collateral security 
for any debt or promise, or upon any pretext of such security or promise, 
shall be guilty of a misdemeanor, and upon conviction thereof shall be 
punished by a fine not exceeding one hundred dollars. (Chapter 75, 
General Acts of 1916.) 

353 



Teachers' Pension Systems in the United States 

voucher for deductions from the teachers' salaries provided for in 
section nine shall transmit, monthly, the amounts specified in such voucher 
to the secretary of the retirement board. 

(2) The secretary of the retirement board shall monthly pay to the 
treasurer of the commonwealth all sums collected by him under the 
provisions of paragraph (i). 

(3) All funds of the retirement system shall be in custody and charge 
of the treasurer of the commonwealth and the treasurer shall invest such 
funds as are not required for current disbursements in accordance with 
the laws of the commonwealth governing the investment of sinking funds. 
He may, whenever he sells securities, deliver the securities so sold upon 
receiving the proceeds thereof, and may execute any or all documents 
necessary to transfer the title thereto. 

(4) The treasurer of the commonwealth shall make such payments to 
members of the retirement association from the annuity fund and pension 
fund as the retirement board shall order to be paid in accordance with 
sections six and seven of this act. 

(5) On, or before, the third Wednesday in January, the treasurer of 
the commonwealth shall file with the insurance commissioner for the com- 
monwealth, and with the secretary of the retirement board, a sworn state- 
ment exhibiting the financial condition of the retirement system on the 
thirty-first day of the preceding December and its financial transactions 
for the year ending at such date. Such statement shall be in the form 
prescribed by the retirement board and approved by the insurance com- 
missioner. 

MEMBERSHIP IN OTHER RETIREMENT ASSOCIATIONS 

Section 12. (i) No person required to become a member of the 
association under the provisions of paragraph (i) of section three of this 
act shall be entitled to participate in the benefits of any other teachers' 
retirement system, supported in whole or in part by funds raised by 
taxation, or to a pension under the provisions of chapter four hundred 
and ninety-eight of the acts of the year nineteen hundred and eight, or 
chapter five hundred and eighty-nine of the acts of the year nineteen 
hundred and eight, as amended by chapter six hundred and seventeen 
of the acts of the year nineteen hundred and ten. 

(2) No member of the retirement association shall be eligible to 
receive any pension as described in section six of this act, who is at the 
time in receipt of a pension paid from funds raised in whole or in part 
from taxation under the provisions of chapter four hundred and ninety- 
eight of the acts of the year nineteen hundred and eight, or chapter five 
hundred and eighty-nine of the acts of the year nineteen hundred and 
eight, as amended by chapter six hundred and seventeen of the acts 
of the year nineteen hundred and ten, or of any other act providing 
pensions for teachers, providing that this paragraph shall not be con- 
strued as applying to the Boston Teachers' Retirement Fund Association. 

REIMBURSEMENT OF CITIES AND TOWNS 

Section 13. (i) Whenever, after the first day of July, nineteen hun- 
dred and fourteen, a town or city retires a teacher who is not eligible 
to a pension under the provisions of section six, paragraph (4) of this 
act, and pays to such teacher a pension in accordance with chapter four 
hundred and ninety-eight of the acts of the year nineteen hundred and 
eight, or chapter five hundred and eighty-nine of the acts of the year 
nineteen hundred and eight, as amended by chapter six hundred and 
seventeen of the acts- of the year nineteen hundred and ten, and the 

354 



Appendices 

school committee of said town or city certifies under oath to the retire- 
ment board to the amount of said pension, said town or city shall be 
reimbursed therefor annually by the commonwealth : provided, that no 
such reimbursement shall be in excess of the amount, as determined by 
the retirement board, to which said teacher would have been entitled as a 
pension, had he become a member of the retirement association under 
the provisions of section three, paragraph (2) of this act. 

(2) On or before the first Wednesday of January of each year, the 
retirement board shall present to the general court a statement of the 
amount expended previous to the preceding first day of July by cities 
and towns in the payment of pensions under the provisions of the pre- 
ceding paragraph, for which such cities and towns should receive reim- 
bursement. On the basis of such a statement, the general court may 
make an appropriation for the reimbursement of such cities and towns 
up to such first day of July. 

JURISDICTION OF COURT 

Section 14. The superior court shall have jurisdiction in equity upon 
petition of the insurance commissioner or of any interested party to 
compel the observance and restrain the violation of this act, and of the 
rules and regulations established by the retirement board hereunder. 

REFERENDUM AND REPEAL 

Section 15. Upon the petition of not less than five per cent of the 
legal voters of any city or town that has adopted chapter four hundred 
and ninety-eight of the acts of the year nineteen hundred and eight, 
this question shall be submitted, in case of a city, to the voters of such 
city at the next city election, and, in case of a town, to the voters of 
such town at the next annual town meeting, and the vote shall be in 
answer to the question to be placed upon the ballot : "Shall an act passed 
by the general court in the year nineteen hundred and eight, entitled, 'An 
Act to authorize cities and towns to establish pension funds for teachers 
in the public schools,' be repealed?" and if a majority of the voters voting 
thereon at such election or meeting shall vote in the affirmative said act 
shall be repealed in such city or town. 

Section 16. So much of chapter four hundred and ninety-eight of 
the acts of the year nineteen hundred and eight as authorizes its sub- 
mission to the voters of a city or town for acceptance after the passage 
of this act is hereby repealed. 

Section 17. This act shall take effect upon its passage. 

(b) City of New York 

Laws of 1917, Chapter 303.— An Act to Amend the 
Greater New York Charter and to Repeal Sections 
Ten Hundred and Ninety-Two-a, Ten Hundred and 
Ninety-Two-b. and Ten Hundred and Ninety-Two-c 
thereof, in relation to Teachers' Retirement Fund 

The People of the State of New York, represented in Senate and 
Assembly, do enact as follows : 

Section i. Section ten hundred and ninety-two of the Greater New 
York charter, as re-enacted by chapter four hundred and sixty-six of the 
laws of nineteen hundred and one, and amended by chapter five hundred 
and thirty of the laws of nineteen hundred and two, chapter one hundred 
and seventy-seven of the laws of nineteen hundred and three, chapter six 
hundred and sixty-one of the laws of nineteen hundred and five, chapter 

355 



Teachers' Pension Systems in the United States 

one hundred and sixty-seven of the laws of nineteen hundred and seven 
and chapter four hundred and seventy-six of the laws of nineteen hun- 
dred and fourteen, is hereby amended to read as follows : 

§ 1092. The following words and phrases as used in this act, unless 
a different meaning is plainly required by the context, shall have the 
following meanings : 

(i) "Retirement system" shall mean the arrangement for the payment 
of retirement allowances, under the provisions of this act. 

(2) "Retirement association" shall mean the teachers' retirement asso- 
ciation provided for in subdivision B of this act. 

(3) "Retirement board" shall mean the teachers' retirement board 
provided for in subdivision C of this act. 

(4) "Medical board" shall mean the board of physicians provided for 
in subdivision T of this act. 

(5) "Board of education" shall mean the board of education of the 
city of New York. 

(6) "Public school" shall mean any class, school, high school, normal 
school, training school, vocational school, truant school, parental school, 
and all schools or classes conducted under the order and superintendence 
of the board of education, and the schools or classes maintained by the 
department of public charities or by the department of correction in 
pursuance of the rules established or to be established by the board of 
education, or by the commissioner of public charities or by the commis- 
sioner of correction for schools or classes maintained by such commis- 
sioners, respectively. 

"{7) "Teacher" shall mean the city superintendent of schools, the 
associate city superintendents, the district superintendents, the director 
and the assistant director of the division of reference and research, the 
director and the assistant directors of the bureau of compulsory education, 
school census and child welfare, the members of the board of examiners, 
the directors and the assistant directors of special branches, the supervisor 
and the assistant supervisors of lectures, all principals, vice-principals, 
assistants-to-principals, heads of departments, and all regular and special 
teachers of the public day schools of the city of New York, and all em- 
ployees of the board of education appointed to regular positions in the 
service of the public schools at annual salaries and whose appointments 
were made or shall hereafter be made from eligible lists prepared as the 
result of examinations held by the board of examiners of the department 
of education. 

(8) "Present-teacher" shall mean any teacher employed in the public 
schools as a teacher on the first day of August, nineteen hundred and 
seventeen, or on leave of absence on said date. 

(9) "New-entrant" shall mean any teacher appointed to serve in the 
public schools after the first day of August, nineteen hundred and 
seventeen. 

(10) "Contributor" shall mean any member of the retirement asso- 
ciation. 

(11) "Transferred-contributor" shall mean a contributor as defined 
in subdivision I of this act. 

(12) "Beneficiary" shall mean any person in receipt of a pension, 
an annuity, a retirement allowance, or other benefit as provided in 
this act. 

(13) "City-service" shall mean any service as an employee of the 
city of New York or of any department, bureau, board or corporation 
created under the provisions of the Greater New York charter, or as an 
employee of any of the municipalities, counties or parts thereof which 
are included within the boundaries of the city of New York or which 
have been incorporated into said city. 



Appendices 

(14) "Prior-service" shall mean all city-service and all teaching or 
supervisory service in schools or colleges not maintained by the city of 
New York computed to and including the sixteenth day of September, 
nineteen hundred and seventeen, in the case of a present-teacher and 
in the case of a new-entrant to the date of his appointment as a teacher, 
subject to the limitations and restrictions imposed by subdivision H 
of this act. 

(15) "Total-service" shall mean all prior-service together with all sub- 
sequent service as a teacher or contributor as provided in this act. 

(16) "Service retirement" shall mean retirement as defined in sub- 
division K of this act. 

(17) "Disability retirement" shall mean retirement as defined in sub- 
division L of this act. 

(18) "Average salary" shall mean the average annual salary earnable 
by a contributor for the ten years immeditely preceding retirement except 
that in case a contributor shall retire prior to the first day of January, 
nineteen hundred and twenty-two, average salary shall mean the average 
annual salary earnable by the contributor since the first day of January, 
nineteen hundred and twelve. 

(19) "Minimum contribution" shall mean (a) the amount realized 
by deducting from the salary of a contributor three per centum of his 
earnable salary or (b) such per centum thereof, if less than three per 
centum, as shall be computed to be sufficient, with regular interest, when 
paid until age sixty-five, to provide for him on retirement at that age 
an annuity which, when added to his pension provided for in this act, 
will provide a retirement allowance of fifty per centum of his average 
salary. 

(20) "Minimum accumulation" shall mean the amount created by the 
accumulation of the minimum contributions, together with the regular 
interest thereon. 

(21) "Accumulated deductions" shall mean the total of the amounts 
deducted from the salary of a contributor and standing to the credit of 
his individual account in the annuity savings fund, together with the 
regular interest thereon. 

(22) "Regular interest" shall mean interest at four per centum per 
annum, compounded annually. 

(23) "Pension" shall mean payments for life derived from appropria- 
tions made by the city of New York and from any ether sources of revenue 
of the pension reserve funds as provided in this act. 

(24) "Annuity" shall mean payments for life derived from contribu- 
tions made by a contributor as provided in this act. 

(25) "Retirement allowance" shall mean the pension plus the annuity. 

(26) "Pension reserve" shall mean the present value computed on the 
basis of such mortality tables as shall be adopted by the retirement board, 
with regular interest, of the future payments to be made on account 
of any pension granted under the provisions of this act. 

(27) "Annuity reserve" shall mean the present value computed on the 
basis of such mortality tables as shall be adopted by the retirement 
board, with regular interest, of the future payments to be made on account 
of any annuity or benefit granted and based on the accumulated deduc- 
tions of the contributor. 

(28) "Expense fund" shall mean the fund provided for in paragraph 
numbered one in subdivision F of this act. 

(29) "Contingent reserve fund" shall mean the fund provided for in 
paragraph numbered two in subdivision F of this act. 

(30) "Pension reserve fund number one" shall mean the fund pro- 
vided for in paragraph numbered three in subdivision F of this act. 

357 



Teachers' Pension Systems in the United States 

(31) "Pension reserve fund number two" shall mean the fund pro- 
vided for in paragraph numbered four in subdivision F of this act. 

(32) "Annuity savings fund" shall mean the fund provided for in 
paragraph numbered five in subdivision F of this act. 

(33) "Annuit}' reserve fund" shall mean the fund provided for in 
paragraph numbered six in subdivision F of this act. 

(34) "Fiscal year" shall mean the year commencing with January first 
and ending with December thirty-first next following. 

A. The retirement system shall be established on the first day of 
August, nineteen hundred and seventeen. 

B. A teachers' retirement association is hereby organized among the 
teachers of the public schools ; its membership shall consist of the 
following: 

1. All teachers who have been granted or shall hereafter be granted 
permanent licenses pursuant to section ten hundred and eighty-nine. 

2. All teachers, without a permanent license, who shall file a state- 
ment in writing with the retirement board consenting to membership in 
the retirement association and to the deductions for annuity purposes 
prescribed in this act. 

3. All transferred-contributors. 

C. I. A retirement board of seven members is hereby constituted 
which shall consist of the following: 

(a) The president of the board of education. 

(b) The comptroller of the city of New York. 

(c) Two members appointed by the mayor of the city of New York, 
one of whom shall be a member of the board of education ; they shall 
serve until their successors are appointed. Should the board-of-edu- 
cation member of the retirement board cease to be a member of the 
board of education he shall thereupon cease to be a member of the retire- 
ment board. 

(d) Three members of the retirement association elected from the 
contributors as follows : On the first Thursday of May, nineteen hundred 
and seventeen, and in each year thereafter, the contributors in each 
public school shall meet in their respective schools at three o'clock in 
the afternoon, or if the administrative conditions in any school are such 
that the meeting ought to be held at some other hour, then at such 
hour in said school as shall be designated by the city superintendent 
of schools after consultation with the principal of said school ; the 
principal of the school, and in his absence the acting principal, shall call 
the meeting to order, and the contributors present at the meeting shall 
proceed to elect from their number by ballot a chairman and a secretary, 
and shall then elect from their number by ballot one delegate for each 
ten contributors and major fraction thereof in said school; each school 
shall have at least one delegate. At the close of the meeting the secretary 
thereof shall transmit to the district superintendent in charge of the 
school the names of the delegates so elected. On the second Thursday 
of May, nineteen hundred and seventeen, and in each year thereafter, 
said delegates shall meet at three o'clock in the afternoon in one of the 
schools in the district designated by the district superintendent ; said 
designation shall be made and mailed by the district superintendent to 
each delegate at least three days before the second Thursday of May. 
For the purpose of attending the meeting each delegate shall leave his 
school not later than two-thirty o'clock in the afternoon on said second 
Thursday of May. No delegate shall suffer loss of pay by reason of 
attendance at said meeting. Said delegates shall be called to order by 
the, principal of the school, and in his absence by the acting principal 
of the school, in which the meeting is held. Two-thirds of the delegates 



Appendices 

elected in a district shall constitute a quorum for that district. The 
delegates present at the meeting shall proceed to elect from their number 
by ballot a chairman and a secretary, and shall then elect from their 
number by ballot a representative and an alternate for said representative. 
Immediately after the meeting, the secretary thereof shall transmit to 
the secretary of the board of education the name of the representative 
and the name of the alternate so elected. The representatives shall meet 
at three o'clock in the afternoon of the third Thursday of May in each 
year at the hall of the board of education; for the purpose of attending 
said meeting, the representatives shall leave their respective schools at two 
o'clock in the afternoon on said third Thursday of May. No representative 
shall suffer loss of pay by reason of attendance at said meeting. Said 
meeting shall be called to order by the city superintendent of schools or, 
in his absence, by the acting city superintendent of schools ; two-thirds 
of the said representatives shall constitute a quorum ; said representatives 
shall elect from their number by ballot a chairman and a secretary, and 
shall then elect by ballot a contributor to serve as a member of the retire- 
ment board for three j'ears. At the first meeting of the representatives 
after this act takes effect, said representatives shall elect by ballot three 
contributors to serve as members of the retirement board ; the three so 
elected shall determine by lot their terms of office as one, two, and three 
years, respectively. Should a vacancy occur among the members of the 
retirement board elected by the representatives, said representatives shall 
meet within ten days thereafter at a special meeting at the call of the 
president of the board of education, and they shall proceed to elect by 
ballot a contributor to serve on said retirement board for the unexpired 
term. The proceedings at this special meeting shall be in all respects 
the same as the proceedings at the regular meeting held on the third 
Thursday of May. Should a vacancy occur among the representatives, 
or should any representative be unable to attend any meeting, his place 
shall be taken at said meeting by his alternate. 

(e) For the purpose of voting for delegates on the first Thursday 
of May, nineteen hundred and seventeen, all teachers shall be considered 
to be contributors. 

(f) For the purpose of voting for delegates, teachers and contributors, 
not appointed as regular teachers to any public school, shall be considered 
to be teachers regularly appointed to teach in such schools as the board 
of education by its by-laws shall prescribe. 

2. The members of the retirement board shall serve as such without 
compensation but shall be reimbursed from the expense fund for any 
necessary expenditures and no contributor shall suffer loss of salary or 
wages through serving on the retirement board. 

3. The retirement board shall elect from its membership a chairman, 
and shall appoint a secretary, an actuary, and such medical, clerical and 
other employees as may be necessary. 

4. The compensation of all employees of the retirement board shall 
be fixed by said retirement board subject to the approval of the board 
of estimate and apportionment. 

5. Subject to the limitations of this act and of law, the retirement 
boaVd shall from time to time establish rules and regulations for the 
administration of the funds created by this act and for the transaction 
of its business. 

6. The retirement board shall keep in convenient form such data as 
shall be necessary for actuarial valuation of the various funds created 
by this act. 

7. In the years nineteen hundred and nineteen and nineteen hundred 
and twenty-two, and in every fifth year thereafter, the actuary of the 

359 



Teachers' Pension Systems in the United States 

retirement board shall make an actuarial investigation into the mortality 
and service experience of the cantributors and beneficiaries as defined 
in this act, and shall make a valuation of the various funds created by 
this act, and on the basis of such investigation and valuation the retire- 
ment board shall 

(a) Adopt for the retirement system one or more mortality tables 
and such other tables as shall be deemed necessary. 

(b) Certify the rates of deduction from salary necessary to pay the 
annuities authorized under the provisions of this act ; and 

(c) Certify the rates of contribution, expressed as a percentage of 
salary of new entrants at various ages, which shall be made by the city 
of New York to the contingent reserve fund. 

8. Immediately after the passage of this act the actuary of the 
retirement board shall make such investigation of the mortality, service, 
and salary experience of the teachers as the retirement board shall author- 
ize. On the basis of such investigation and upon the recommendation 
of the actuary the retirement board shall adopt such tables and certify 
such rates as are required in sub-sections a, b, and c of paragraph seven 
immediately preceding. On the basis of such tables the actuary of the 
retirement board shall as soon as practicable after the first day of 
August, nineteen hundred and seventeen, make a valuation of the various 
funds created by this act. 

9. The retirement board shall publish annually a report certified to 
by each member showing the condition of the various funds created by 
this act, and setting forth such other facts, recommendations, and data, 
as may be of use in the advancement of knowledge concerning teachers' 
pensions and annuities ; and said retirement board shall submit said report 
to the mayor of the city of New York and shall file at least fifty copies 
thereof with the board of education for the use of said board and of its 
members ; and at least one copy in each school for the use of the teachers 
thereof. It shall also file one copy in the office of the city superin- 
tendent of schools, and of each associate city superintendent of schools, 
and of each district superintendent of schools. 

ID. Each member of the retirement board shall take an oath of office 
that he will, so far as it devolves upon him, diligently and honestly 
administer the affairs of said retirement board and that he will not 
knowingly violate or wilfully permit to be violated any of the provisions 
of law applicable to this act. Such oath shall be subscribed by the 
member making it, and certified by the officer before whom it is taken, 
and shall be immediately filed in the office of the clerk of the county of 
New York. 

11. The concurrence of the comptroller or of one member appointed 
by the mayor, of a member elected by the retirement association, and of 
at least two other members shall be necessary for a decision of the 
retirement board. 

12. The retirement board shall keep a record of all its proceeding* 
open to public inspection. 

13. The retirement board shall perform such other functions as are 
required for the execution of the provisions of this act. 

D. For the purposes of this act, the retirement board shall possess 
the powers and privileges of a corporation, and as such may sue and be 
sued. The corporation counsel of the city of New York shall be the legal 
adviser of said retirement board. 

E. The funds created by this act shall be managed as follows: 

I. The members of the retirement board shall be the trustees of the 
several funds created by this act, and shall have exclusive control and 
management of said funds, and shall have full power to invest the same, 

360 



Appendices 

subject, however, to all the terms, conditions, limitations, and restrictions 
imposed by this act upon the making of investments and subject also 
to the terms, conditions, limitations, and restrictions imposed by law 
upon savings banks in the making and disposing of investments by 
savings banks; and, subject to like terms, conditions, limitations, and 
restrictions, said trustees shall have full power to hold, purchase, sell, 
assign, transfer, or dispose of any of the securities and investments 
in which any of the funds created by this act shall have been invested as 
well as of the proceeds of said investments, and of any moneys belonging 
to said funds. The retirement board shall annually allow regular interest 
on each of the funds as provided for in this act with the exception of 
the expense fund and pension reserve fund number two. The amount 
so allowed shall be due and payable to said funds and shall be annually 
credited thereto by the retirement board. 

2. The comptroller of the city of New York shall be the custodian 
of the several funds created by this act. 

3. Payments from the funds created by this act shall be made by the 
comptroller of the city of New York upon warrant signed by the chair- 
man and countersigned by the secretary of the retirement board ; and 
no warrant shall be drawn except by order of the retirement board duly 
entered in the record of its proceedings. 

4. For the purpose of meeting disbursements for pensions, annuities 
and other payments in excess of the receipts, there may be kept an 
available fund, not exceeding ten per centum of the total amount in the 
several funds created by this act, on deposit in any bank in this State, 
organized under the laws thereof or under the laws of the United States, 
or with any trust company incorporated by any law of this State, pro- 
vided said bank or trust company shall furnish adequate security for said 
funds and provided that the sum so deposited in any one bank or trust 
company shall not exceed twenty-five per centum of the paid-up capital 
and surplus of said bank or trust company. 

5. Except as herein provided no member and no employee of the 
retirement board shall have any interest, direct or indirect, in the gains 
or profits of any investment made by the retirement board, nor as such, 
directly or indirectly, receive any pay or emolument for his serivces. 
And no member or employee of said retirement board, directly or indi- 
rectly, for himself or as an agent or partner of others, shall borrow any 
of its funds or deposits, or in any manner use the same except to make 
such current and necessary payments as are authorized by the retirement 
board • nor shall any member or employee of said retirement board 
become an endorser or surety or become in any manner an obligor for 
moneys loaned by or borrowed of said retirement board. 

F. The funds hereby created are the expense fund, the contingent 
reserve fund, pension reserve fund number one, pension reserve fund 
number two, the annuity savings fund and the annuity reserve fund. 

1. The expense fund shall consist of such amounts as shall be 
appropriated by the board of estimate and apportionment, on estimates 
submitted by the retirement board, to defray the expenses of the admin- 
istration of this act, exclusive of the payment of pensions, of annuities, 
of retirement allowances, and of the other benefits provided for in 
this act. 

2. Beginning in the month of August, nineteen hundred and seventeen, 
the city of New York shall pay each month into a fund to be known as 
the contingent reserve fund, on account of each new-entrant who is a 
contributor, such amount as shall be certified by the retirement board as 
necessary to provide during the prospective active service of such new- 
entrant for the death benefit and for the pension reserve required at the 

361 



Teachers' Pension Systems in the United States 

time of retirement to pay the disability or service pension allowable 
by the city under the provisions of this act. The amount so certified 
by the retirement board shall be computed to bear a constant ratio to the 
salary of such new-entrant during his entire period of prospective active 
service and shall be based on such mortality and other tables as shall 
be adopted by the retirement board, and on regular interest. Beginning 
in the year nineteen hundred and eighteen the city of New York shall 
further pay each year into the said contingent reserve fund one million 
dollars on account of present-teachers, which payment shall continue 
until the present value of such amounts so paid into the contingent reserve 
fund, together with the amounts restored to the contingent reserve fund 
from pension reserve fund number one on account of present-teachers 
restored to active service, shall equal the present value of all amounts 
which have been transferred from the contingent reserve fund to pension 
reserve fund number one on account of present-teachers plus the present 
value of all amounts thereafter to be transferred from the contingent 
reserve fund to said pension reserve fund number one on account of 
present-teachers; said amounts shall be computed on the basis of such 
mortality and other tables as shall be adopted by the retirement board, 
and on regular interest. 

3. Upon the retirement of a new-entrant, an amount equal to his 
pension reserve shall be transferred from the contingent reserve fund 
into a fund to be known as pension reserve fund number one; his pension 
shall be paid from said pension reserve fund number one. Should said 
new-entrant be subsequently restored to active service his pension reserve 
shall thereupon be transferred from pension reserve fund number one 
to the contingent reserve fund. Upon the retirement of a present-teacher, 
an amount equal to the amount of his accumulated deductions not ex- 
ceeding the amount of his pension reserve shall be transferred from the 
contingent reserve fund into pension reserve fund number one ; a pension 
which shall be the actuarial equivalent of the amount so transferred 
shall be paid to said retired present-teacher from pension reserve fund 
number one. Should said present-teacher be subsequently restored to 
active service the pension reserve on such pension shall thereupon be 
transferred from pension reserve fund number one to the contingent 
reserve fund. 

4. Pension reserve fund number two shall consist of the following: 

(a) The balance remaining in the permanent fund of the retirement 
fund of the board of education of the city of New York on the thirty-first 
day of July, nineteen hundred and seventeen. 

(b) The balance remaining in the retirement fund of the board of 
education of the city of New York on the thirty-first day of July, nineteen 
hundred and seventeen. 

(c) Five per centum of all excise moneys or license fees belonging 
to the city of New York, and derived or received by any commissioner 
of excise or public officer from the granting of licenses or permission 
during the year nineteen hundred and seventeen to sell strong or spirituous 
liquors, ale, wine, or beer in the city of New York under the provisions 
of any law of this State authorizing the granting of such license or 
permission. 

(d) The donations, legacies, and gifts which may be made to the 
retirement system. 

(e) The sums now due and which hereafter may become due to the 
retirement fund of the board of education of the city of New York. 

(f) The amounts contributed by the city of New York to pay the 
pensions of the teachers retired on or before the thirty-first day of July, 
nineteen hundred and seventeen, and to pay that part of the pensions and 

362 



Appendices 

the other benefits of present-teachers who shall be retired or who shall 
become eligible for retirement after the thirty-first day of July, nineteen 
hundred and seventeen, which are not payable from any other fund 
created by this act. Pensions and other benefits, or such part thereof 
allowable to present-teachers and to present pensioners, provision for the 
payment of which out of any other fund created by this act is not 
specifically made, shall be paid out of pension reserve fund number two. 

5. The annuity savings fund shall consist of the accumulated deduc- 
tions from the salaries of contributors made, under such rules and regu- 
lations as the retirement board shall prescribe, as follows : 

(a) From the salary of each present-teacher who is a contributor 
there shall be deducted such per centum of his earnable salary as he shall 
elect, provided, however, that such contributor shall be limited in his choice 
to one of the following rates : 

(i) Three per centum of his earnable salary. 

(2) Such per centum of his earnable salary as shall be computed 
to be sufficient, with regular interest, when paid until age sixty-five, to 
provide for him on retirement at that age an annuity which, when added 
to his pension, provided for in this act, will provide a retirement allow- 
ance of fifty per centum of his average salary. 

(3) A per centum of his earnable salary greater than three per centum 
thereof. 

Should any present-teacher, on becoming a contributor, fail to make 
such an election, he shall be deemed to have elected a deduction from 
his salary at the rate of three per centum of his earnable salary. 

(b) From the salary of each new-entrant who is a contributor, there 
shall be deducted such per centum of his earnable salary as shall be 
computed to be sufficient, with regular interest, to procure for him on 
service retirement an annuity equal to twenty-five per centum of his 
average salary ; the rate per centum of said deduction from salary shall 
be based on such mortality and other tables as the retirement board shall 
adopt, together with regular interest, and shall be computed to remain 
constant during his prospective teaching service prior to eligibility for 
service retirement; but no beneficiary restored to duty shall be required 
to contribute a per centum of his earnable salary greater than the per 
centum thereof which he was required to contribute prior to his retire- 
ment 

(c) And the head of each department shall deduct on each and every 
payroll of a contributor for each and every payroll period subsequent to 
July thirty-first, nineteen hundred and seventeen, such per centum of the 
total amount of salary earnable by the contributor in such payroll period 
as shall be certified to said head of department by the retirement board 
as proper in accordance with the provisions of this act. In determining 
the amount earnable by a contributor in a payroll period the retirement 
board shall consider the rate of salary payable to such contributor on the 
first day of each regular payroll period as continuing throughout such 
payroll period and it may omit salary deductions for any period less than 
a full payroll period in cases where the teacher was not a contributor 
on the first day of the regular payroll period ; and to facilitate the making 
of the deductions it may modify the deduction required of any contributor 
by such amount as shall not exceed one-tenth of one per centum of the 
salary upon the basis of which the deduction is to be made ; the deductions 
provided herein shall be made notwithstanding that the minimum salaries 
provided for by section ten hundred and ninet}^-one shall be reduced 
thereby; and said head of each department shall certify to the comptroller 
on each and every payroll the amounts to be deducted ; and each of said 
amounts so deducted shall be paid into said annuity savings fund, and 



Teachers' Pension Systems in the United States 

shall be credited together with regular interest to an individual account 
of the contributor from whose salary the deduction was made. 

6. Upon the retirement of a contributor, his accumulated deductions 
shall be transferred from the annuity savings fund to a fund to be known 
as the annuity reserve fund; his annuity shall be paid out of said annuity 
reserve fund. Should such a beneficiary be restored to active service his 
annuity reserve shall thereupon be transferred from the annuity reserve 
fund to the annuity savings fund. 

7. No contributor shall be required to continue to contribute to the 
annuity savings fund after he shall have become eligible for service retire- 
ment; all contributions made thereafter to said fund shall be voluntary. 

G. Regular interest charges payable, the creation and maintenance 
of reserves in the contingent reserve fund and the maintenance of annuity 
reserves and pension reserves as provided for in this act and the payment 
of all pensions, annuities, retirement allowances, refunds, death benefits 
and any other benefits granted under the provisions of this act are hereby 
made obligations of the city of New York. All income, interest, and divi- 
dends derived from deposits and investments authorized by this act shall 
be used for the payment of the said obligations of the city of New York. 
Upon the basis of each actuarial determination and appraisal provided for 
in this act, the retirement board shall prepare and submit to the board of 
estimate and apportionment on or before the fifteenth day of September 
in each year an itemized estimate of the amounts necessary to be appro- 
priated by the city to the various funds to complete the payment of the 
said obligations of said city accrumg during the ensuing fiscal year. The 
board of estimate and apportionment and the board of aldermen shall 
make an appropriation which shall be sufficient to provide for such 
obligations of the city of New York and the amounts so appropriated 
shall be included in the tax levy and shall be paid by the comptroller into 
the various funds created by this act. 

H. In computing the length of service of a contributor for retire- 
ment purposes under the provisions of this act, full credit up to the 
nearest number of years and months shall be given each contributor by 
the retirement board (a) for all city-service; and (b) in the case of 
present-teachers for all teaching or supervisory services in schools and 
colleges not maintained by the city of New York ; and (c) in the case 
of new-entrants for all teaching or supervisory service not exceeding 
fifteen years, in schools and colleges not maintained by the city of New 
York. Under such rules and regulations as the retirement board shall 
adopt, each teacher shall file with the retirement board a detail state- 
ment of all such service rendered by him. As soon as practicable there- 
after, the retirement board shall verify such statement as to prior-service 
and shall issue to each teacher a certificate certifying to the aggregate 
length of his prior-service. Such certificate shall be final and conclusive 
as to his prior-service unless thereafter modified by (a) the retirement 
toard upon application by the teacher; or (b) by the board of education 
upon application by the teacher or by the retirement board, provided such 
application for modification be made to said board of education within one 
year after the issuance of a certificate or a modified certificate by the 
retirement board. A certificate for prior-service issued to a present- 
teacher shall certify the total length of prior-service allowance for said 
present-teacher through the sixteenth day of September, nineteen hundred 
and seventeen. The time during which a contributor was absent on leave 
of absence without pay shall not be counted in computing the prior-service 
or the total-service of a contributor, unless allowed both by the head of 
the department in which the said contributor was employed at the time 
said leave of absence was granted and by the retirement board; the time 

364 



Appendices 

during which a contributor was absent on leave of absence on full pay or 
part pay from city-service shall be counted in computing the prior-service 
and the total-service of said contributor. For the purpose of computing 
prior-service the retirement board shall fix and determine by appropriate 
rules and regulations how much service rendered on the basis of the 
hour, day or session, or any other than a per annum basis shall be the 
equivalent of a year of service. No allowance shall be made for such 
service as a substitute teacher, night school teacher, vocational school 
teacher, or for any service rendered in a position to which the con- 
tributor was not regularly appointed and served on a per annum salary 
unless such service was city-service. But all service allowed by the 
board of examiners of the board of education pursuant to section ten 
hundred and ninety-one shall be allowed by the retirement board. 

I. Any contributor who resigns his position to accept and who, within 
sixty days thereafter, does accept another position in the city-service shall 
continue to be a contributor while in said city-service and shall be known 
as a transferred-contributor provided he executes and files with the 
retirement board a statement in writing that he elects to leave with the 
annuity savings fund his accumulated deductions and to continue to con- 
tribute to said fund at a rale of salary deduction not less than the rate 
of deduction theretofore required from his salary, and further pro- 
vided that he shall waive and renounce any present or prospective benefit 
from any other retirement system or association supported wholly or in 
part by the city of New York. 

J. Withdrawals from the retirement association shall be by resigna- 
tion, by transfer, or by dismissal. 

1. Should a contributor resign frorh the position by virtue of which he 
is a contributor under the provisions of this act, or should he, upon trans- 
ferring from such a position to another position in the city-service, fail 
to become a transferred-contributor as provided in subdivision I of this 
act, his membership in the said retirement association shall cease and he 
shall be paid forthwith the full amount of the accumulated deductions 
standing to the credit of his individual account in the annuity savings fund. 

2. Should a contributor be dismissed from the position by virtue of 
which he is a contributor under the provisions of this act, his membership 
in the retirement association shall cease and there shall be paid him forth- 
with : 

(a) Out of the annuity savings fund the full amount of the accumulated 
deductions standing to the credit of his individual account; and 

(b) In addition thereto, out of pension reserve fund number two, an 
amount equal to the contributions made by him to the teachers' retire- 
ment fund of the board of education of the city of New York as it 
existed prior to the first day of August, nineteen hundred and seventeen. 

K. Retirement for service shall be as follows : 

1. Any contributor may retire for service upon written application to 
the retirement board setting forth at what time subsequent to the execu- 
tion of said application he desires to be retired. Said application shall 
retire said contributor at the time so specified, provided 

(a) He has reached or passed the age of sixty-five years or 

(b) If a present-teacher, he has a total-service of thirty-five years or 
more; or 

(c) If a new-entrant, he has a total-service of thirty-five years or more, 
at least twenty of which shall have been city-service. 

2. Each and every contributor who has attained or shall attain the age 
of seventy years shall be retired by the retirement board for service forth- 
with or at the end of the school term in vv^hich said age of seventy years 
is attained. 



Teachers' Pension Systems in the United States 

L. Retirement for disability shall be made and discontinued as follows : 

1. Upon the application of the head of the department in which a 
contributor is employed, or upon the application of said contributor or 
of one acting in his behalf, the retirement board shall retire said con- 
tributor for disability, provided the medical board after a medical examina- 
tion of said contributor made at the place of residence of said con- 
tributor or at a place mutually agreed upon shall certify to the retire- 
ment board that said contributor is physically or mentally incapacitated 
for the performance of duty and that said contributor ought to be retired 
and provided further that said contributor has had ten or more years of 
city-service. 

2. Once each year, the retirement board may require any disability pen- 
sioner while still under the age of sixty-five years to undergo medical ex- 
amination by a physician or physicians designated by the medical board, 
said examination to be made at the place of residence of said beneficiary 
or other place mutually agreed upon. Should the medical board, as the 
result of such examination, report and certify to the retirement board 
that such disability beneficiary is no longer physically or mentally in- 
capacitated for the performance of duty, the head of the department in 
which said beneficiary was employed at the time of his retirement shall, 
upon notification by the retirement board of such report of the medical 
board, reappoint said beneficiary to such a position as was held by, and 
at such a rate of salary as was paid to, said beneficiary at the time of 
his retirement ; but after the expiration of ten years subsequent to the 
retirement of such beneficiary, his restoration to duty, notwithstanding 
the recommendation of the medical board, shall be optional with said head 
of the department. 

3. Should any disability beneficiary while under the age of sixty-five 
years refuse to submit to at least one medical examination in any year 
by a physician or physicians designated by the medical board, his pension 
shall be discontinued until the withdrawal of such refusal and should 
such refusal continue for one year, all his rights in and to the pension 
constituted by this act shall be forfeited. 

4. Upon application of any beneficiary under the age of sixty-five 
years drawing a pension or a retirement allowance under the pro- 
visions of this act, approved by the retirement board, said beneficiary 
may be restored to active service by the head of the department in which 
said beneficiary was employed at the time of his retirement. Upon the 
restoration of a beneficiary to active service his retirement allowance 
shall cease. 

M. A contributor, on retirement, shall receive a retirement allowance 
which shall consist of : 

1. A pension calculated as follows : 

(a) For disability retirement twenty per centum of his average salary. 

(b) For service retirement, or for disability retirement after he becomes 
eligible for service retirement, twenty-five per centum of his average 
salary. 

(c) If the contributor retiring is a present-teacher, he shall receive, 
in addition to the pension prescribed in subdivisions (a) or (b) a pension 
computed at the rate of one-thirty-fifth of twenty-five per centum of his 
average salary for each year of prior-service as certified to said present- 
teacher in the certificate issued to him by the retirement board under the 
provisions of subdivision H of this act, but in no event shall the total 
pension exceed fifty per centum of his average salary. 

2. An annuity, in addition to the pension, which shall be the actuarial 
equivalent of his accumulated deductions at the time of his retirement, 
provided that in no case shall such annuity be less for each one hundred 

366 



Appendices 

dollars of accumulated deductions of a present-teacher at the time of 
retirement than is shown in the following schedule: 

Annuity in case of Annuity in case of 

Age at retirement men teachers women teachers 

48 $7-20 $6.52 

49 7-34 6.64 

50 7-49 6.77 

51 7-65 ■ 6.90 

52 7-82 7-04 

53 8.00 7-19 

54 8.19 7.35 

55 8.39 7.52 

56 8.61 7-70 

57 8.84 7.89 

58 909 8.10 

59 9-35 8.31 

60 9-63 8.54 

61 9-93 8.79 

62 10.25 9.05 

63 10.60 9-33 

64 10.96 9.63 

65 11.36 9-95 

66 11.78 10.30 

67 12.24 10.67 

68 T2.72 11.06 

69 1325 11.48 

70 13.81 11.94 

N. Upon the death of a contributor before retirement there shall be 
paid to his estate or to such person as he shall have nominated by written 
designation duly executed and filed with the retirement board (a) his 
accumulated deductions; and in addition thereto (b) an amount equal 
to the salary earnable by him during the six months immediately preceding 
his death, provided that at the time of his death he had attained the 
age of sixty-five years or had a total service of thirty-five years and was 
eligible for service retirement; said amount to be paid out of the contin- 
gent reserve fund in the case of a new-entrant, and out of pension 
reserve fund number two in the case of a present-teacher. 

O. At the time of his retirement any contributor may elect to 
receive his benefits in a retirement allowance payable throughout life 
or he may on retirement elect to receive the actuarial equivalent at that 
time of his annuity, his pension, or his retirement allowance in a lesser 
annuity, or a lesser pension, or a lesser retirement allowance, payable 
throughout life, with the provision that : 

Option I. If he die before he has received in payments the present 
value of his annuity, his pension, or his retirement allowance, as it was 
at the time of his retirement, the balance shall be paid to his legal repre- 
sentatives or to such person, having an insurable interest in his life, as he 
shall nominate by written designation duly acknowledged and filed with 
the retirement board at the time of his retirement. 

Option II. Upon his death, his annuity, his pension, or his retirement 
allowance, shall be continued throughout the life of and paid to such 
person, having an insurable interest in his life, as he shall nominate 
by written designation duly acknowledged and filed with the retirement 
board at the time of his retirement. 

Option III. Upon his death, one-half of his annuity, his pension, or 

Z^7 



Teachers' Pension Systems in the United States 

his retirement allowance, shall be continued throughout the life of and 
paid to such person, having an insurable interest in his life, as he shall 
nominate by written designation duly acknowledged and filed with the 
retiremenit board at the time of his retirement. 

Option IV. Som.e other benefit or benefits shall be paid either to the 
contributor or to such other person or persons as he shall nominate, 
provided such other benefit or benefits together with such lesser annuity, 
or lesser pension, or lesser retirement allowance shall be certified by the 
actuary of the retirement board to be of equivalent actuarial value and 
shall be approved by the retirement board. 

P. The pensions of all persons who are now receiving a pension 
paid out of the teachers' retirement fund of the board of education 
of the city of New York shall not be increased or decreased, and all such 
pensions now due shall be paid forthwith and those hereafter becoming 
due shall be paid as they become due out of pension reserve fund num- 
ber two. 

Q. A pension, an annuity or a retirement allowance, granted under 
the provisions of this act, shall be paid in equal monthly instalments, 
and shall not be decreased, increased, revoked or repealed except as 
otherwise provided in subdivision L of this act. 

R. Subject to such terms and conditions and to such rules and 
regulations as the retirement board may adopt, any contributor from 
time to time may: 

(a) Increase or decrease his rate of contribution to the annuity savings 
fund, but in no event shall the contribution of a present-teacher be less 
than the minimum contribution, nor shall the contribution of a new- 
entrant be at a rate less than the per centum rate provided for said new- 
entrant in subdivision F-five-b of this act; 

(b) If a present-teacher, withdraw from his individual account in the 
annuity savings fund the amount in excess of his minimum accumulation; 

(c) Withdraw, after having become eligible for service retirement, 
such part of his accumulated deductions as shall be in excess of the 
amount necessary to procure for him an annuity which if added to his pros- 
pective pension, will yield a retirement allowance of fifty per centum 
of his average salary; 

(d) Borrow from the retirement board, if a present-teacher and if 
the application is made prior to July first, nineteen hundred and twenty, 
on a policy of life insurance, a sum of money not exceeding the loan 
value of said policy as set forth in the body thereof, and at a rate of 
interest not exceeding five per centum per annum, provided that : 

1. The applicant has a policy of life insurance in which he is 
designated as the assured and said policy is issued by a life insurance 
company permitted to transact business in the state of New York, and 
said policy is free from any liens or claims and is in full force and effect 
at the time of the making of the loan. 

2. The applicant on securing the loan shall deposit said life insurance 
policy with the retirement board accompanied with an assignment of 
said policy to the retirement board ; said assignment shall be executed 
by the applicant and by all adult beneficiaries named in said policy. Should 
any of the beneficiaries named in said policy be infants, said retirement 
board shall not grant the loan until after it has made a careful investi- 
gation into the merits thereof and an order has been made and entered 
by the supreme court directing such loan after due notice to such insur- 
ance company. If, thereafter, the retirement board shall grant the loan, 
its action shall be binding on said infant beneficiaries with the same force 
and effect as if they were adult beneficiaries and had executed the assign- 
ment required herein. 

368 



Appendices 

3. After said policy has been assigned to and deposited with the 
retirement board for the purposes herein stated, said policy shall not be 
assigned, transferred, or disposed of, or changed in any of its terms with- 
out the written consent of the retirement board. 

4. The retirement board shall notify the life insurance company carry- 
ing said policy of the assignment thereof and said assignment shall be 
binding on said company. 

(e) If a present-teacher, retire upon written application to the retire- 
ment board after he has completed thirty years of service upon retirement 
allowance consisting of 

(i) An annuity which shall be the actuarial equivalent of his accumu- 
lated deductions ; and, in addition thereto, 

(2) Such pension as shall be certified by the actuary of the retire- 
ment board to have an actuarial value equivalent to the reserve which 
would be in the contingent reserve fund had the city contributed on 
account of such present-teacher from the date of his entrance into 
service, in such manner as is provided for the city's contributions on 
behalf of new-entrants in subdivision F, paragraph two, of this act, the 
amount determined by the actuary of the retirement board to be necessary 
to provide for the death benefit and for the pension reserve required 
at the time of retirement to pay the pension allowable by the city as 
provided in this act. In determining the amount of the reserve the 
actuary of the retirement board shall base his calculations on the tables 
then in use as the basis for determining the rates of contribution required 
of the city on account of new-entrants. 

5. Teachers, hereafter appointed in the schools or classes maintained 
in the institutions controlled by the department of public charities or by 
the department of correction, shall be appointed by the commissioner of 
the appropriate department upon the nomination of the city superintendent 
of schools and shall be licensed by the board of examiners of the depart- 
ment of education. The department of education through such repre- 
sentatives as it may designate shall maintain an effective visitation and 
inspection of all sucli schools and classes. 

T. There shall be a medical board of three physicians constituted 
as follows : 

(a) One physician appointed to serve to August first, nineteen hun- 
dred and twenty-two, who shall be appointed by the members of the 
retirement board who are contributors. 

(b) One physician appointed to serve to August first, nineteen hundred 
and twenty-one, who shall be appointed by the members of the retirement 
board who are not contributors. 

(c) One physician appointed to serve to August first, nineteen hun- 
dred and twenty, who shall be appointed by the retirement board. Said 
physician shall be an expert in women's diseases and in diseases of the 
nervous system. 

Their successors shall be appointed to serve for a term of three 
years ; vacancies shall be filled for the unexpired term. All appointments 
for a full term or for an unexpired term shall be made in the manner 
provided in this section for the original appointment. 

U. The retirement system created by this act shall be subject to 
the supervision of the department of insurance in accordance with the 
provisions of sections thirty-nine and forty-five of the insurance law, 
so far as the same are applicable thereto and are not inconsistent with 
the provisions of this act. 

V. If, after August first, nineteen hundred and seventeen, any present- 
teacher shall recover a judgment for arrears of salary covering in whole 
or in part any period prior to said date, the comptroller of the city 

369 



Teachers' Pension Systems in the United States 

of New York before paying said judgment shall deduct therefrom the 
per centum of salary theretofore contributed by said teacher to the 
retirement fund of the board of education, as it existed prior to said date, 
and said deduction shall be paid into pension reserve fund number two. 

W. The right of a person to a pension, an annuity, or a retirement 
allowance, to the return of contributions, the pension, annuity, or retire- 
ment allowance itself, any optional benefit, any other right accrued or 
accruing to any person under the provisions of this act, and the moneys 
in the various funds created under this act, are hereby exempt from any 
state or municipal tax, and exempt from levy and sale, garnishment, 
attachment, or any other process whatsoever, and shall be unassignable 
except as in this act specifically otherwise provided. 

The general care and management of the public school teachers' retire- 
ment fund created for the former city of New York by chapter two 
hundred and ninety-six of the laws of eighteen hundred and ninety-four, 
and of the public school teachers' retirement fund created for the former 
city of Brooklyn, by chapter six hundred and fifty-six of the laws of 
eighteen hundred and ninety-five, is hereby given to the board of educa- 
tion, and the said funds are hereby made parts of the retirement fund 
of the board of education of the city of New York created by this act. 
The board of education shall from time to time establish such rules and 
regulations for the administration of said fund as it may deem best, which 
rules and regulations shall preserve all rights inhering in the teachers 
of the city of New York and the city of Brooklyn as constituted prior 
to the passage of this act ; and said board shall make payments from said 
fund of annuities granted in pursuance of this act. The comptroller of 
the city of New York shall hold and invest all money belonging to said 
fund, and by direction of said board of education, shall pay out the same; 
and he shall report in detail to the board of education of the city of 
New York, annually, in the month of January, the condition of said fund 
and the items of receipts and disbursements on account of the same. 
The said retirement fund shall consist of the following, with the interest 
and income thereof: (i) All money, pay, compensation or salary, or any 
income thereof forfeited, deducted, reserved, or withheld for any cause 
from any member or members of the teaching or supervising staflf of the 
public day schools of the city of New York or of the normal college and 
training department of the normal college of the city of New York, or 
of schools or classes maintained in institutions controlled by the depart- 
ment of public charities or by the department of correction, in pursuance 
of rules established or to be established by the board of education, or by 
the board of trustees of the normal college of the city of New York, 
or by the commissioner of public charities, or by the commissioner of 
correction for schools or classes maintained by such commissioners re- 
spectively. The auditor of the board of education, the auditor of the 
board of trustees of the normal college, the commissioner of public 
charities, and the commissioner of correction shall certify monthly to the 
comptroller the amounts so forfeited, deducted, reserved or withheld 
during the preceding month. Said amounts shall be turned into the said 
retirement fund. (2) All moneys received from donations, legacies, gifts, 
bequests, or otherwise for or on account of such fund. (3) Five per 
centum annually of all excise moneys or license fees belonging to the 
city of New York, and derived or received by any commissioner of ex- 
cise or public officer from the granting of licenses or permission to sell 
strong or spirituous liquors, ale, wine, or beer in the city of New York, 
under the provisions of any law of this State authorizing the granting 
of such license or permission. (4) One per centum of the salaries of 
all members of the teaching and supervising staff of the public day 



Appendices 

schools of the city of New York, and of the normal college and training 
department of the normal college of the city of New York, and of schools 
or classes maintained in institutions controlled by the department of 
public charities or by the department of correction of the city of New 
York, except that the amount deducted from the salary of any teacher 
or principal of the public day schools of the city of New York or of 
schools or classes maintained in institutions controlled by the depart- 
ment of public charities or by the department of correction of the city 
of New York, in this manner, shall not exceed thirty dollars in any one 
year, and the amount deducted from the salary of any supervising official, 
in this manner, shall not exceed forty dollars in any one year. And 
the board of education, the board of trustees of the normal college, the 
commissioner of public charities, and the commissioner of correction 
shall, after the passage of this act, deduct on each and every payroll of 
the said teaching and supervising staff said one per centum from each 
and every amount earnable in the period covered by the said payroll, 
notwithstanding the minimum salaries provided for by section ten 
hundred and ninety-one of the charter shall be thereby reduced, and shall 
certify monthly to the comptroller, the amounts so deducted ; and said 
amounts shall be turned into the said retirement fund. All deductions 
made under the provisions of this clause from the salary of any person 
who may be dismissed from the service for cause, before said person shall 
have become eligible for retirement, under the provisions of this act, shall 
be refunded to said person upon such dismissal. (5) All such other 
methods of increment as may be duly and legally devised for the increase 
of said fund. The moneys standing to the credit of the retirement fund 
on the thirty-first day of December, nineteen hundred and four, after sub- 
tracting therefrom any amounts forfeited, deducted, reserved or with- 
held from salaries for absences prior to that date, which may, on excuse 
of absence, be refunded after that date, all excise moneys of nineteen hun- 
dred and four which may have been credited to said fund on or before 
that date, and all interest for nineteen hundred and four on said fund, 
which may have been credited to said fund on or before said date, shall be 
set apart by the comptroller as a permanent fund. The unexpended bal- 
ances of the income of the teachers' retirement fund for the year nineteen 
hundred and five, and for all subsequent years shall be added to the said 
permanent fund. The comptroller shall invest the said permanent fund, 
and the income thereof may be used for the payment of annuities, but if 
necessary, in order to carry out the provisions of this act, the board of 
education may use any portion of the permanent fund in excess of eight 
hundred thousand dollars in the same manner as the income thereof. 
The president of the board of education, the chairman of the committee 
on elementary schools of said board, the chairman of the committee on 
high schools of said board, the city superintendent of schools, and three 
members to be selected from the principals, assistants to principals and 
teachers of the public day schools shall constitute a board of retirement. 
The three last-named members shall be chosen as follows : On the sec- 
ond Thursday of May in each year the principals, assistants to principals 
and teachers in each district shall meet at the call of the district super- 
intendent, which call he shall issue at least one week before said meet- 
ing, and at a place within the district designated by him, to select by 
ballot one of their number as district representative to serve for one 
year. At the close of said meeting, the presiding officer shall transmit 
to the secretary of the board of education the name and address of 
the district representative so chosen. The district representatives shall 
meet at 4 o'clock in the afternoon on the third Thursday of May 
at the hall of the board of education and choose by ballot one of 



Teachers' Pension Systems in the United States 

their number to serve on the board of retirement for three years from 
the first day of the following June. At the first meeting of the district 
representatives after this lavir takes effect, they shall choose by ballot 
three of their number to serve on the board of retirement, and the three 
so chosen shall by lot fix and determine their terms of office as one, two 
and three years respectively. Should a vacancy occur among the members 
of the board of retirement so chosen, the district representatives shall 
meet and choose by ballot one of their number to serve on the board of 
retirement for the unexpired term. On the recommendation of the board 
of retirement, said board of education shall have power, by a two-thirds 
vote of all its members, to retire any member of the teaching or super- 
vising staff of the public day schools of the city of New York, or of 
schools or classes maintained in institutions controlled by the department 
of public charities or by the department of correction who is mentally 
or physically incapacitated for the performance of duty, and who has 
been engaged in the work of teaching or of school or college supervision, 
or of examination of teachers for licenses, or any two or more of these 
several kinds of work, for a period aggregating twenty years, fifteen of 
which shall have been in the public day schools in the city of New York, 
or in schools or classes maintained in institutions controlled by the depart- 
ment of public charities or by the department of correction. And the board 
of education may retire from active service any member of the said 
teaching or supervising staff who shall have attained the age of sixty- 
five years and shall have been engaged in the work of teaching or school 
supervision for a period aggregating thirty years. On the recommendation 
of the board of retirement, the board of education shall have power, by a 
two-thirds vote of all its members, to retire upon his or her own appli- 
cation any member of the teaching or supervising staff of the public day 
schools of the city of New York, or of schools or classes maintained in 
institutions controlled by the dapartment of public charities or by the 
department of correction who has been engaged in the work of teaching 
or of school or college supervision, or of examination of teachers for 
licenses, or any two or more of these several kinds of work, for a period 
aggregating thirty years, fifteen of which shall have been in any of the 
said institutions. The said board of education shall also have power, by 
a two-thirds vote of all its members, and after recommendation to that 
effect shall have been made by the board of trustees of the normal col- 
lege stating that the member of the supervising or teaching force is 
mentally or physically incapacitated for the performance of duty, to re- 
tire any member of the teaching or supervising force of the normal col- 
lege or of the training department of the normal college who shall have 
been engaged in said normal college or training department or elsewhere 
in the public school system of the city of New York for ten years and 
shall have been engaged in the work of teaching or of school or college 
supervision or of examination of teachers for licenses, or any two or 
more of said several kinds of work, during a period aggregating twenty 
years. The said board of education, upon the recommendation of the 
trustees of the normal colleg? may also, in its discretion retire any member 
of the teaching or supervising force upon his or her own application who 
shall have been engaged in the work of teaching or school or college 
supervision or examination of teachers for licenses, or any two or more 
such occupations, for a period aggregating thirty years. _ Upon such re- 
tirement, whether voluntary or otherwise, the person retired shall be en- 
titled to receive an annuity out of the teachers' retirement fund of not 
less than one-half of the annual salary paid to such person at the period 
of retirement, and in case of the president or of a professor to such an 
additional sum per annum as will increase such one-half of the salary 

2>7^ 



Appendices 

previously paid if not an even multiple of one thousand dollars to an even 
multiple of one thousand dollars. Any person retired under the provisions 
of this act after thirty years of service, except as hereinbefore in this sec- 
tion provided in the case of the president or of a professor of the normal 
college, shall receive as an annuity one-half of the annual salary paid to 
said person at the date of said retirement, not to exceed, however, in the 
case of a teacher or principal, the sum of fifteen hundred dollars 
per annum, and in the case of a supervising official, two thousand dol- 
lars per annum. And in no case shall the annuity of any person already 
retired or hereafter to be retired after thirty years of service be less 
than six hundred dollars. Any person retired after twenty years of 
service, but with less than thirt}- years of service, shall receive an an- 
nuity which bears the same ratio to the annuity provided for on retire- 
ment after thirty years of service as the total number of years of service 
of said person bears to thirty years. The annuities provided for by this 
act shall be payable in monthly installments. All retirements made under 
the provisions of this act shall take effect either on the first day of 
February or on the first day of September. The number of persons re- 
tired in any one year shall be so limited that the entire amount of the 
annuities to be paid for that year shall not be in excess of the estimated 
amount of the retirement fund applicable to the payment of annuities for 
that year. The words "teaching and supervising staff of the public day 
schools of the city of New York" as used in this section, shall include 
the city superintendent of schools, the associate city superintendents, the 
district superintendents, the director and assistant director of the division 
of reference and research, the members of the board of examiners, direc- 
tors and assistant directors of special branches, the supervisor and as- 
sistant supervisor of lectures, all principals, vice-principals, assistants to 
principals, heads of departments, and all regular and special teachers of 
the public day schools of the city of New York. Nothing in this act shall 
be construed as prohibiting the reappointment to active service, on his or 
her own application, of any person who has been retired under the pro- 
visions of this act. Upon the reappointment of any such person the pay- 
ment of the annuity of said person shall be discontinued. Teachers here- 
after appointed in schools or classes maintained in the institutions con- 
trolled by the department of public charities or by the department of cor- 
rection, shall be appointed by the commissioner of the appropriate depart- 
ment upon the nomination of the city superintendent of schools and shall 
be licensed by the board of examiners of the department of education. 
The department of education through such representatives as it may desig- 
nate shall maintain an eflfective visitation and inspection of all such schools 
and classes. 

§ 2. Section ten hundred and ninety-two-a, as amended by chapter one 
hundred and seven of the laws of nineteen hundred and five, section ten 
hundred and ninety-two-b, as amended by chapter five hundred and five of 
the laws of nineteen hundred and nine, and section ten hundred and ninety- 
two-c, as amended by chapter six hundred and thirteen of the laws of 
nineteen hundred and sixteen, are hereby repealed. 

§ 3. This act shall take effect on August first, nineteen hundred and 
seventeen, except as to subdivisions B, C, D. E, paragraph 5 ; subdivision 
F, paragraph one, and the provision of subdivision F, paragraph 5, part 
(a), which provides for the election of a rate of salary deduction by any 
person entitled to make such election and the further provision of the 
same part which provides that if any person entitled to make such elec- 
tion fails so to do he shall be deemed to have elected a deduction from 
his salary at the rate of three per centum of his earnable salary; sub- 
divisions H, T, and U, and as to provisions of such subdivisions, para- 

373 



Teachers' Pension Systems in the United States 

graphs and parts of paragraphs this act shall take effect imme- 
diately. 

(c) Pennsylvania 

Lav/s of 1917, No. 343.— An Act.— Establishing a public school, 
employes' retirement system, and creating a retirement board 
for the administration thereof; establishing certain funds from 
contributions by the Commonwealth and contributing employes, 
defining the uses and purposes thereof and the manner of pay- 
ments therefrom, and providing for the guaranty by the Com- 
monwealth of certain of said funds; imposing powers and duties 
upon boards having the employment of public school employes; 
exempting annuities, allowances, returns, benefits, and rights 
from taxation and judicial process; and providing penalties. 

DEFINITIONS 

Section i. Be it enacted, etc., that the following words and phrases as 
used in this act, unless a different meaning is plainly required by the 
context, shall have the following meanings : 

(i) "Retirement System" shall mean the arrangement for the pay- 
ment of retirement allowances under the provisions of this act. 

(2) "Retirement Association" shall mean the employes' retirement asso- 
ciation provided for in section three of this act. 

(3) "Retirement Board" shall mean the employes' retirement board 
provided for in section four of this act. 

(4) "Superintendent of Public Instruction" shall mean the Superin- 
tendent of Public Instruction of the Commonwealth of Pennsylvania. 

(5) "Public School" shall mean any class, school, high school, normal 
school, training school, vocational school, truant school, parental school, 
and any or all classes or schools, within tlie State of Pennsylvania, con- 
ducted under the order and superintendence of the Department of Public 
Instruction of the Commonwealth of Pennsylvania and of a duly elected 
or appointed board of public education, board of school directors, or board 
of trustees, of the Commonwealth, or of any school district or normal 
school disrtict thereof, and shall include the officers of the State Depart- 
ment of Public Instruction and the State Board of Education. 

(6) "Employer" shall mean the Commonwealth, school district, normal 
school district, board, or other committee by which the employe is paid. 

(7) "Employe" shall mean any teacher, principal, supervisor, super- 
vising principal, county superintendent, district superintendent, assistant 
superintendent, any member of the staff of the State normal schools, or 
of the staff of the State Department of Public Instruction, or of the staff 
of the State Board of Education, or any clerk, stenographer, janitor, 
attendance officer, or other person engaged in any work concerning or 
relating to the public schools of this Commonwealth, or in connection 
therewith, or under contract or engagement to perform one or more of 
these functions : Provided, That no person shall be deemed an employe, 
within the meaning of this act, who is not regularly engaged in perform- 
ing one or more of these functions as a full-time occupation, outside of 
vacation periods. In all cases of doubt the retirement board shall deter- 
mine whether any person is an employe as defined in this act. 

(8) "Present Employe" shall mean any employe, as defined in para- 
graph seven of this section, employed in any capacity in connection with 
the public schools at the time this bill becomes a In.w, and any employe 
who was employed prior to such time and who shall become a contributor 
within three years from the date of expiration of such employment. 

(9) "New entrant" shall mean any employe, as defined in paragraph 

374 



Appendices 

seven of this section, appointed or elected, or contracting or otherwise 
legally engaging, to serve in any capacity in connection with the public 
schools after this bill becomes a law. 

(lo) "Contributor" shall mean any person who has an account in the 
annuity savings fund. 

(li) "Beneficiary" shall mean any person in receipt of a retirement 
allowance or other benefit as provided in this act. 

(12) "School Service" shall mean any service as an employe as defined 
by paragraph seven of this section. 

(13) "Prior Service" shall mean all school service completed not later 
than the thirtieth day of June, nineteen hundred and nineteen. 

(14) "School Year" shall mean the official school year of the school 
district in which an employe is employed. 

(15) "Disability Retirement" shall mean retirement as defined in section 
twelve of this act. 

(16) "Superannuation Retirement" shall mean retirement as defined in 
section thirteen of this act. 

(17) "Final Salary" shall mean the average annual salary, not exceed- 
ing $2,000, earnable by a contributor as an employe for the ten years of 
service immediately preceding retirement. 

(18) "Accumulated Deductions" shall mean the total of the amounts 
deducted from the salary of a contributor and credited to his or her in- 
dividual account in the annuity savings fund, together with the regular 
interest thereon. 

(19) "Regular Interest" shall mean interest at four per cent, per an- 
num, compounded annually. 

(20) "State Annuity" shall mean payments for life, derived from con- 
tributions made by the Commonwealth of Pennsylvania as provided in 
this act. 

(21) "Employe's Annuity" shall mean payments for life, derived from 
contributions made by a contributor as provided in this act. 

(22) "Retirement Allowance" shall mean the State annuity plus the em- 
ploye's annuity. 

{23) "State Annuity Reserve" shall mean the present value, computed 
on the basis of such mortality tables as shall be adopted by the retire- 
ment board, with regular interest, of the future payments to be made on 
account of any State annuity granted, and based on contributions made 
by the Commonwealth of Pennsylvania. 

(24) "Employe's Annuity Reserve shall mean the present value, com- 
puted on the basis of such mortality tables as shall bs adopted by the 
retirement board, with regular interest, of the future payments to be 
made on account of any employe's annuity granted, and based on the 
accumulated deductions of the contributor. 

(25) "Expense Fund" shall mean the fund provided for in paragraph 
number two in section eight of this act. 

(26) "Contingent Reserve Fund" shall mean the fund provided for in 
paragraph number three in section eight of this act. 

(27) "State Annuity Reserve Fund" shall mean the fund provided for 
in paragraph number four in section eight of this act. 

(28) "State Annuity Reserve Fund Number Two" shall mean the fund 
provided for in paragraph number five in section eight of this act. 

(29) "Employes' Annuity Savings Fund" shall mean the fund pro- 
vided for in paragraph number six in section eight of this act. 

(30) "Employes' Annuity Reserve Fund" shall mean the fund pro- 
vided for in paragraph number seven in section eight of this act. 

375 



Teachers' Pension Systems in the United States 



RETIREMENT SYSTEM 

Section 2. The retirement system shall be established on the first day 
of July, nineteen hundred and nineteen. 

employes' retirement association 

Section 3. An employes' retirement association is hereby organized, 
the membership of which shall consist of the following: 

1. All present employes, except those specifically excluded by para- 
graph three of this section, who by written application to the Superin- 
tendent of Public Instruction shall elect, before the first day of July, 
nineteen hundred and nineteen, to be covered by the retirement system. 

2. All new entrants, except those specifically excluded by paragraph 
three of this section. 

3. Present employes who are members, and new entrants who become 
members, of a retirement system, maintained under the laws of the Com- 
monwealth from appropriations or contributions made wholly or in part 
by any employer, and existing at the time this bill becomes a law, shall 
be excluded from membership in this retirement association. But should 
two-thirds of all the members participating in any such retirement system 
apply for membership in the retirement association, by a petition duly 
signed and verified, approved by their employer, and filed with the re- 
tirement board, all the persons included in the membership of such retire- 
ment system shall become members of the retirement association at such 
time, within three months after the filing of such petition, as the retire- 
ment board shall designate. Thereupon the retirement system of which 
they were members at the time they were included in the retirement asso- 
ciation provided by this act shall be dissolved and discontinued as follows : 

The payment of retirement allowances or other benefits which were 
in eflFect at the time of such discontinuance shall become an obligation of 
the employer, shall be continued as formerly provided by such retirement 
system, and shall be paid out of such moneys, excepting further contribu- 
tions of members, as were formerly available for such payment, and the 
employer shall appropriate for such purpose such other moneys as shall 
be required. 

All present assets of such retirement system at the time of its dis- 
continuance shall be transferred to the employer, to be held and invested 
as a trust fund and disbursed only in payment to the before-mentioned 
retired members, except that if the aniount of such present assets exceed 
the present value of the future retirement allowances or other benefits 
of such retired members, computed on the basis of such tables as the 
retirement board shall have adopted for similar classes of annuitants, 
and of regular interest, the amount of the excess shall thereupon be trans- 
ferred to State annuity reserve fund number two. Upon the retirement 
of any contributor of the retirement association established by this act, 
who has not received back any contributions which he or she made to 
such discontinued retirement system, there shall be paid from State an- 
nuity reserve fund number two into employes' annuity reserve fund the 
amount of such contributions, and he or she shall receive therefor such 
annuity or other benefit purchasable therewith as he or she may elect, 
in addition to the other benefits provided by this act. 

the retirement board 

Section 4. A retirement board of seven members is hereby constituted, 
which shall consist of the following: 

(a) The Superintendent of Public Instruction. 

(b) The Treasurer of the Commonwealth of Pennsylvania. 



376 



Appendices 

(c) One member who shall be appointed by the Governor of the Com- 
monwealth of Pennsylvania, who shall serve until his successor is ap- 
pointed. 

(d) Three members of the retirement association, elected from among 
their number in a manner to be approved by the Superintendent of Public 
Instruction, the State Treasurer, and the member of the retirement board 
appointed by the Governor, — one to serve for one year, one for two 
years, and one for three years; and whose successors shall be elected, 
for a term of three years, from among the members of the retirement 
association, in a manner to be approved by the retirement board. 

(e) One member, not an employe nor officer or employe of the State, 
who shall be elected annually by the board, to serve for a term of one 
year. 

A vacancy occurring during a term shall be filled for the unexpired 
term by the appointment of a successor in the same manner as his or 
her predecessor. Until the organization of the retirement association, 
and the election of three representatives therefrom, the Superintendent 
of Public Instruction, the State Treasurer, and the member appointed by 
the Governor, are empowered to perform the duties of the retirement 
board. 

2. The members of the retirement board shall serve without compensa- 
tion, but shall be reimbursed from the expense fund for any necessary 
expenditures, and no contributor shall suffer loss of salary or wages 
through serving on the retirement board. 

3. The retirement board shall elect, from its membership, a chairman, 
and shall appoint a secretary, an actuary, and such medical, clerical, and 
other employes as may be necessary. 

4. The compensation of all persons employed by the retirement board 
shall be fixed by said retirement board. 

5. Subject to the limitations of this act and of law, the retirement 
board shall, from time to time, establish rules and regulations for the 
administration of the funds created by this act and for the transaction 
of its business. 

6. The retirement board shall keep, in convenient form, such data as 
shall be necessary for actuarial valuation of the various funds created 
by this act. 

7. In the years nineteen hundred and twenty-one and nineteen hundred 
and twenty-four, and in every fifth year thereafter, the actuary of the 
retirement board shall make an actuarial investigation into the mortality 
and service experience of the contributors and beneficiaries- as defined 
in this act, and shall make a valuation of the various funds created by 
this act ; and, on the basis of such investigation and valuation, the retire- 
ment board shall — 

(a) Adopt for the retirement system one or more mortality tables, 
and such other tables as shall be deemed necessary; 

(b) Certify the rates of deduction from salary necessary to pay the 
annuities authorized under the provisions of this act; and 

(c) Certify the rates of contribution, expressed as a percentage of 
salary of new entrants at various ages, which shall be made by the 
Commonwealth to the contingent reserve fund. 

8. Immediately after the passage of this act, the actuary of the retire- 
ment board shall make such investigation of the mortality service and 
salary experience of the employes of the public schools as he shall recom- 
mend and the retirement board shall authorize, for the purpose of de- 
termining upon the proper tables to be prepared and submitted to the 
retirement board for adoption. On the basis of such investigation and 
recommendation the retirement board shall adopt such tables and certify 

377 



Teachers' Pension Systems in the United States 

such rates as are required in subsections a, b, and c of paragraph seven, 
immediately preceding. On the basis of such tables the actuary of the 
retirement board shall, immediately after the first day of July, nineteen 
hundred and ninteen, make a valuation of the various funds created by 
this act. 

9. The retirement board shall publish annually a report show^nig the 
condition of the various funds created by this act, and setting forth such 
other facts, recommendations, and data as may be of use in the advance- 
ment of knowledge concerning employes' pensions and annuities, and 
said retirement board shall submit said report to the Governor of the 
Commonw^ealth of Pennsylvania ; and shall file copies thereof in the 
offices of the State Department of Public Instruction, of the State In- 
surance Department, and of each employer, for use of the employes and 
the public. 

ID. Each member of the retirement board shall take an oath of office 
that he or she w^ill, so far as it devolves upon him, diligently and hon- 
estly administer the affairs of said retirement board, and that he or she 
will not knowingly violate or wilfully permit to be violated any of the 
provisions of law applicable to this act. Such oath shall be subscribed 
by the member making it, and certified by the officer before whom it is 
taken, and shall be immediately filed in the office of the Secretary of State. 

11. The retirement board shall keep a record of all of its proceedings, 
which shall be open to inspection by the public. 

12. The retirement board shall perform such other functions as are 
required for the execution of the provisions of this act. 

CORPORATE POWERS 

Section 5. For the purposes of this act the retirement board shall pos- 
sess the powers and privileges of a corporation. The Attorney General 
of the Commonwealth of Pennsylvania shall be the legal adviser of said 
retirement board. 

MANAGEMENT OF THE FUNDS 

Section 6. The funds created by this act shall be managed as follows: 

1. The members of the retirement board shall be the trustees of the 
several funds created by this act, and shall have exclusive control and 
management of the said funds and full power to invest the same; subject, 
however, to all the terms, conditions, limitations and restrictions im- 
posed by this act upon the making of investments; and subject, also, 
to the terms, conditions, limitations, and restrictions imposed by law upon 
savings banks, in the making and disposing of their investments ; and, 
subject to like terms, conditions, limitations, and restrictions, said trustees 
shall have full power to hold, purchase, sell, assign, transfer, or dispose 
of any of the securities and investments in which any of the funds created 
by this act shall have been invested, as well as of the proceeds of said 
investments and of any moneys belonging to said funds. 

2. The retirement board shall annually allow regular interest on the 
mean amount for the preceding year in each of the funds created in 
accordance with the provisions of this act, with the exception of the 
expense fund. The amount so allowed shall be due and payable to such 
funds, and shall be annually credited thereto by the retirement board. 

3. The treasurer of this Commonwealth shall be the custodian of the 
several funds created by this act. 

4. All payments from the funds created by this act shall be made by 
the State Treasurer only, upon warrants signed by the chairman of the 
retirement board and countersigned by the secretary of the retirement 



378 



Appendices 

board; and no warrant shall be drawn except by order of the retirement 
board, duly entered in the record of its proceedings. 

5. For the purpose of meeting disbursements for annuities and other 
payments in excess of the receipts, there may be kept as available fund, 
not exceeding ten per centum of the total amount in the several funds 
created by this act, on deposit in any bank in this Commonwealth organ- 
ized under the laws thereof or under the laws of the United States, or 
with any trust company incorporated by any law of this Common- 
wealth, provided said bank or trust company shall furnish adequate 
security for said funds; and provided that the sum so deposited in any 
one bank or trust company shall not exceed twenty-five per centum of the 
paid-up capital and surplus of said bank or trust company. 

6. Except as herein provided, no trustee or any person connected with 
the retirement board shall have any interest, direct or indirect, in the 
gains or profits of any investment made by the retirement board; nor, 
as such, directly or indirectl3^ receive any pay or emoluments for his or 
her services. And no trustee or person connected with said retirement 
board, directly or indirectly, for himself or herself, or as an agent or 
partner of others, shall borrow any of its funds or deposits, or in any 
manner use the same, except to make such current and necessary pay- 
ments as are authorized by the board of trustees ; nor shall any trustee 
or person connected with said retirement board become an endorser or 
surety, or become in any manner an obligor, for moneys loaned by or 
borrowed of said retirement board. 

DUTIES OF THE EMPLOYER 

Section 7. Each employer shall, before employing any person to whom 
this act may apply, notify such person of his or her duties and obligations 
under this act, as a condition of his or her employment. 

2. During September of each year each employer shall certify to the 
retirement board the name of all employees to whom this act applies. 

3. Each employer shall, on the first day of each calendar month, notify 
the retirement board of the employment of new employes, removals, 
withdrawals, and changes in salary of employes, that shall have occurred 
during the month preceding. 

4. Under the direction of the retirement board, each employer shall 
furnish such other information as the board may require in the dis- 
charge of its duties. 

5. Each employer shall cause to be deducted on each and every payroll 
of a contributor, for each and every payroll period subsequent to June 
thirtieth, nineteen hundred nineteen, such per centum of the total amount 
of salary earnable by the contributor in such payroll period as shall be 
certified to said employer by the retirement board as proper, in accordance 
with the provisions of this act. No deductions shall be made from that 
part of the salary earnable by any contributor which is at a rate in excess 
of two thousand dollars per annum. In determining the amount earnable 
by a contributor in a payroll period, the retirement board may consider the 
rate of salary payable to such contributor on the first day of each regular 
payroll period as continuing throughout such payroll period, and it may 
omit salary deductions for any period less than a full payroll period in cases 
where the employe was not a contributor on the first day of the regular 
payroll period ; and, to facilitate the making of the deductions, it may 
modify the deductions required of any contributor by such amount as 
shall not exceed one-tenth of one per centum of the salary upon the basis 
of which the deduction is to be made. The deductions provided herein 
shall be made, notwithstanding that minimum salaries provided for by the 

379 



Teachers' Pension Systems in tpie United States 

laws, ordinances, resolutions, or other acts of the Commonwealth, or of 
any other employer, shall be reduced thereby. Each employer shall certify 
to the treasurer of said employer, on each and every payroll, a statement 
as voucher for the amounts so deducted, and shall send a duplicate of 
such statement to the secretary of the retirement board. 

6. The treasurer of each employer, on receipt from the employer of the 
voucher for deductions from the salaries of employes, provided in para- 
graph five of this section, shall transmit monthly, or at such times as the 
retirement board shall designate, the amounts specified in such voucher 
to the secretary of the retirement board. The secretary of the retirement 
board, after making a record of all such receipts, shall pay them to the 
treasurer of the Commonwealth, for use according to the provisions of 
this act. 

7. Each employer shall keep such records as the retirement board may 
require. 

FUNDS 

Section 8. The funds hereby created are, — the expense fund, the con- 
tingent reserve fund, State annuity reserve fund, State annuity reserve 
fund number two, the employes' annuity savings fund, and the employes' 
annuity reserve fund. 

2. The expense fund shall consist of such amounts as shall be paid by 
the Commonwealth, on the basis of estimates submitted by the retire- 
ment board, to defray the expenses of the administration of this act, ex- 
clusive of the payment of retirement allowances and of the other benefits 
provided for in this act. 

3. In the month of July, 1920, for a period covering the twelve months 
next preceding, and semiannually thereafter, covering the six months next 
preceding, the Commonwealth of Pennsylvania shall pay into a fund to be 
known as the contingent reserve fund, on account of each new entrant 
who was a contributor for one or more months of such respective periods, 
such amount as shall be certified by the retirement board as necessary to 
provide by such method of payment, during the prospective active service 
of such new entrant, the State annuity reserve required at the time of re- 
tirement for the disability or superannuation State annuity allowable by 
the said Commonwealth, under the provisions of this act. The amount 
so certified by the retirement board shall be computed to bear a ratio 
to the salary earnable by such new entrant during the period for which 
the amount is certified, which shall remain constant during his or her 
entire period of prospective active service, and shall be based on such 
mortality and other tables as shall be adopted by the retirement board, 
and on regular interest. 

4. Upon the retirement of a new entrant an amount equal to his or her 
State annuity reserve shall be transferred from the contingent reserve 
fund into a fund to be known as State annuity reserve fund. His or her 
State annuity shall be paid from said State annuity reserve fund. Should 
said new entrant be subsequently restored to active service, his or her 
State annuity reserve shall thereupon be transferred from State annuity 
reserve fund to the contingent reserve fund. Should the State annuity of 
any such new entrant be otherwise reduced or discontinued, in accordance 
with the provisions of this act, his or her State annuity reserve, or such 
proportionate part of his or her State annuity reserve as corresponds to 
the amount of the reduction in his or her State annuity, shall be trans- 
ferred from State annuity reserve fund to the contingent reserve fund. 

5. Beginning with the month of July, nineteen hundred nineteen, 
and continuing until the accumulated reserve equals the present value, as 
computed by the actuary of the retirement board and approved by the 

380 



Appendices 

retirement board, of all State annuity payments thereafter payable by the 
Commonwealth on account of present employes, then retired or to be 
retired on State annuities as provided in this act, the said Commonwealth 
shall pay semi-annually into a fund, to be known as State annuity reserve 
fund number two, an amount equal to two and eight-tenths (28) per 
centum of the total compensation paid to all contributors for service 
during the preceding school year, and in every case an amount at least 
three per centum greater than the second preceding semi-annual payment : 
Provided, That in every case the amount shall be sufficient, when combined 
with that in the fund, to provide the pensions payable by the Common- 
wealth during the half-year then current to present employes, then retired 
or to be retired as provided in this act. Upon the retirement of a present 
employe his or her State annuity shall be paid from State annuity reserve 
fund number two. 

6. The employes' annuity savings fund shall consist of the accumulated 
deductions from the salaries of contributors, made under such rules and 
regulations as the retirement board shall prescribe, as follows : 

From the salary of each employe who is a contributor there shall be 
deducted such per centum of his or her earnable salary, not exceeding 
two thousand dollars per annum, as shall be computed to be sufficient, with 
regular interest, to procure for him or her, on superannuation retirement 
at age sixty-two, an employe's annuity equal to one one-hundred-sixtieth 
(1-160) of his or her final salary for each year of service after the thirtieth 
day of June, nineteen hundred nineteen, except that, if the deduction 
so computed shall exceed five per centum of his or her earnable salary, 
and the employe shall so elect, there shall be deducted five per centum 
of his or her earnable salary : And further provided, That a beneficiary 
restored to school service shall not be required to contribute at a per 
centum rate of his or her earnable salary which is greater than the per 
centum thereof which he or she was required to contribute prior to his or 
her retirement. The rate per centum of said deduction from salary shall 
be based on such mortality and other tables as the retirement board shall 
adopt, together with regular interest, and shall be computed to remain 
constant during the prospective school service of the contributor. 

7. Upon the retirement of a contributor his or her accumulated deduc- 
tions shall be transferred from the employes' annuity savings fund to a 
fund to be known as the employes' annuity reserve fund. His or her em- 
ployes' annuity shall be paid out of said employes' annuity reserve fund. 
Should said contributor be subsequently restored to active service, his or 
her employes' annuity reserve shall thereupon be transferred from the em- 
ployes' reserve fund to the employes' annuity savings fund. 

8. No contributor shall be required to continue to contribute to the 
employes' annuity savings fund after he or she shall have become eligible 
for superannuation retirement; all contributions made thereafetr to said 
fund shall be voluntary. 

Section 9. The Commonwealth of Pennsylvania shall be reimbursed to 
the extent of one-half of the amount paid Idv the Commonwealth into the 
contingent reserve fund and the State annuity reserve fund number two 
on account of employes of each other employer, by payments into its 
treasury made directly by such employer, or indirectly from moneys other- 
wise belonging to such employer. To facilitate the payment of amounts 
due from the treasurer of any employer to the treasurer of the Common- 
wealth, on account of the retirement system, and to permit the exchange 
of credits between the treasurer of the Commonwealth and the treasurer 
of any employer, the State Superintendent of Public Instruction and the 
State Treasurer are hereby authorized and empowered to cause to be 
deducted, and paid into or retained in the State Treasury, from the 

381 



Teachers' Pension Systems in the United States 

amount of any moneys due to any employer on account of any appropria- 
tion for schools or other purposes, the amount due to the State Treasury 
from such employer, in accordance with the provisions of this act. Cor- 
responding amounts, which would be otherwise transferred to the treasury 
of the Commonwealth from the treasurer of such employer, may be cred- 
ited to the accounts of the employer to which the moneys withheld by the 
Commonwealth were payable. 

STATE GUARANTY 

Section lo. Regular interest charges payable, the creation and main- 
tenance of reserves in the contingent reserve fund, and the maintenance 
of employes' annuity reserves and State annuity reserves as provided for 
in this act, and the payment of all retirement allowances and other bene- 
fits granted by the retirement board under the provisions of this act, 
are hereby made obligations of the Commonwealth of Pennsylvania. All 
income, interest, and dividends derived from deposits and investments 
authorized by this act shall be used for the payment of the said obliga- 
tions of the Commonwealth. The retirement board shall prepare, and 
submit to the Legislature, on or before the thirty-first day of January 
in each odd-numbered year, an itemized estimate of the amounts neces- 
sary to be appropriated by the Commonwealth to the various funds to 
complete the payment of the said obligations of said Commonwealth accru- 
ing during the biennium beginning July first of the same year ; and it shall 
be the duty of said Legislature to make an appropriation sufficient to 
provide for such obligations of the Commonwealth ; and the amounts so 
appropriated shall be included in the general appropriation bill, and shall 
be paid by the Treasurer of the Commonwealth into the various funds 
created by this act. For the biennium beginning July first, nineteen hun- 
dred seventeen, there is hereby appropriated to the expense fund 
created by section eight, paragraph two of this act, such sum, not to 
exceed twenty thousand dollars, as shall be certified to the Treasurer of 
the Commonwealth by the retirement board as necessary to meet the ex- 
penses of establishing the retirement system constituted by the provisions 
of this act. For said biennium there is hereby appropriated, and the 
Treasurer of the Commonwealth of Pennsylvania is hereby authorized 
and directed to pay into State annuity reserve fund number two, the 
amounts which shall become due in such period from the Commonwealth 
of Pennsylvania to such fund under the provisions of section eight, para- 
graph five of this act. 

SERVICE ALLOWANCE 

Section ii. In computing the length of service of a contributor for 
retirement purposes, under the provisions of this act, full credit shall 
be given to each contributor by the retirement board for each school 
year of service as an employee, as defined in section one, paragraph seven, 
of the act. Under such rules and regulations as the retirement board 
shall adopt, each employe shall file with the retirement board a detailed 
statement of all such service rendered by him or her. As soon as prac- 
ticable thereafter the retirement board shall verify such statement as 
to prior service, and shall issue to each employee a certificate certifying 
to the aggregate length of his or her prior service. Such certificate 
shall be final and conclusive as to his or her prior service, unless there- 
after modified: (a) by the retirement board, upon application by employe; 
or (b) by the State Superintendent of Public Instruction, upon applica- 
tion by the employee or by the retirement board; provided such appli- 
cation for modification be made to said State Superintendent of Public 



38^ 



Appendices 

Instruction within one year after the issuance of a certificate or a 
modified certificate by the retirement board. A certificate for prior 
service issue to a present employe shall certify the total number of 
completed years of prior service allowance for said present employe to 
and including the thirtieth day of June, nineteen hundred nineteen. The 
time during which an employe is abs€nt without pay shall not be counted 
in computing the prior service, the total service or the average salary 
of a contributor, unless allowed by the employer by whom said con- 
tributor was employed at the time said leave of absence was granted, 
and, further, unless said allowance is approved by the retirement board. 

WITHDRAWAL 

Section 12. Should a contributor, by resignation or dismissal, or in 
any other way than by death or retirement, separate from the school 
service, he or she shall be paid on demand : (a) the full amount of the 
accumulated deductions standing to the credit of his or her individual 
account in the annuity savings fund, or, in lieu thereof, should he or she 
so elect, (b) an annuity or a deferred annuity, which shall be the actuarial 
equivalent of said accumulated deductions. His or her membership in 
the retirement association shall thereupon cease. 

2. Should an employe so separated from the school service, return 
within three years, and restore to the annuity savings fund his or her 
accumulated deductions, as they were at the time of his or her separation, 
the annuity rights forfeited by him or her at that time shall be restored. 

3. Should a contributor die before retirement, his or her accumulated 
deductions shall be paid to his or her estate, or to such person as he or she 
shall have nominated by written designation duly executed and filed with 
the retirement board. 

DISABILITY RETIREMENT 

Section 13. Retirement upon disability shall be made and discontinued 
as follows : — 

1. Upon the application of a contributor who is an employe, or of 
one acting in his or her behalf, or upon the application of the employer 
of a contributor, the retirement board shall retire said contributor on a 
disability allowance if he or she is under the age of sixty-two years, 
and on a superannuation allowance if he or she has attained or passed 
such age ; provided the physician or physicians designated by said board, 
after a medical examination of said contributor made at the place of 
residence of said contributor, or at a place mutually agreed upon, shall 
certify to the retirement board that said contributor is physically or 
mentally incapacitated for the performance of duty, and that said con- 
tributor ought to be retired; and provided further, that said contributor 
has had ten or more school years of school service. 

2. Once each year the retirement board may require any disability 
annuitant, while still under the age of sixty-two years, to undergo medical 
examination by a physician or physicians designated by the retirement 
board, said examination to be made at the place of residence of said 
beneficiary, or other place mutually agreed upon. Should such physician 
or physicians thereupon report and certify to the retirement board that 
such disability beneficiary is no longer physically or mentlaly incapacitated, 
for the performance of duty, or that such disability beneficiary is able 
to engage in a gainful occupation, and should the retirement board 
concur in such report, then the amount of the State annuity shall be dis- 
continued, or reduced to an amount that shall be not in excess of the 
amount by which the amount of the last year's salary of the beneficiary, 



383 



Teachers' Pension Systems in the United States 

as an employe, exceeds the present earning capacity of the contributor. 

3. Should any disability annuitant, while under the age of sixty-two 
years, refuse to submit to at least one medical examination in any year 
by a physician or physicians designated by the retirement board, his or 
her State annuity shall be discontinued until the withdrawal of such 
refusal, and, should such refusal continue for one year, all his or her 
rights in and to the State annuity constituted by this act shall be forfeited. 

4. Upon application of any beneficiary under the age of sixty-two years, 
drawing a retirement allowance under the provisions of this act, said 
beneficiary may be restored to active service by the employer by whom 
he or she was employed at the time of his or her retirement. Upon the 
restoration of a beneficiary to active service, his or her retirement allow- 
ance shall cease. 

ALLOV^ANCE ON DISABILITY RETIREMENT 

5. On retirement for disability, a contributor who is an employe shall 
receive a retirement allowance which shall consist of — 

(a) An employe's annuity, which shall be the actuarial equivalent of 
his or her accumulated deductions; and 

(b) A State annuity which, together with the employe's annuity, shall 
be sufficient to produce a retirement allowance of one-ninetieth of his or 
her final salary multiplied by the number of his or her years of service; 
but, in any case not less than thirty per centum of said final salary, ex- 
cept that in case thirty per centum of said final salary shall exceed eight- 
ninths of the rate of retirement allowance to which the employe might 
have been entitled had retirement been deferred until age sixty-two, then 
the State annuity granted shall be such as to make the rate of the total 
retirement allowance equal to eight-ninths of the rate of allowance to 
which the employe might have been entitled had retirement been deferred 
until age sixty-two. 

SUPERANNUATION RETIREMENT 

Section 14. Retirement for superannuation shall be as follows : 

1. Any contributor who is an employe sixty-two years of age or older 
may retire for superannuation by filing with the retirement board a 
written statement, duly attested, setting forth at what time, subsequent 
to the execution of said application, he or she desires to be retired. 
Said application shall retire said contributor at the time so specified, or, 
in the discretion of the retirement board, at the end of the school term 
in which the time so specified occurs. 

2. Each and every contributor who has attained or shall attain the age 
of seventy years shall be retired by the retirement board, for superannua- 
tion, forthwith, or at the end of the school term in which said age of 
seventy years is attained. 

ALLOWANCE ON SUPERANNUATION RETIREMENT 

3. On retirement for superannuation, a contributor who is an employe 
shall receive a retirement allowance which shall consist of — 

(a) A teacher's annuity, which shall be the actuarial equivalent of his 
or her accumulated deductions ; and 

(b) A State annuity of one one-hundred-sixtieth (1-160) of his or her 
final salary for each year of service prior to the age of sixty-two years; 
and 

(c) In addition thereto, if a present employe, a further State annuity 
of one one-hundred-sixtieth (1-160) of his or her final salary for each 
year of prior service, as certified to said present employe in the certificate 



384 



Appendices 

issued to him or her by thei retirement board under the provisions of 
section ten of this act; but in no event shall the total State annuity exceed 
fifty per centum of his or her final salary. 



Section 15. At the time of his or her retirement any contributor may 
elect to receive his or her benefits in a retirement allowance, payable 
throughout life ; or he or she may, on retirement, elect to receive the 
actuarial equivalent at that time of his employe's annuity, his or her State 
annuity, or his retirement allowance, in a lesser employe's annuity, or a 
lesser State annuity, or a lesser retirement allowance, payable throughout 
Hfe ; with the provisions that : — 

Option I. — If he or she die before he has received in payments the 
present value of his or her employe's annuity, his State annuity, or 
his or her retirement allowance as it was at the time of his retirement, 
the balance shall be paid to his or her legal representatives, or to such 
person having an insurable interest in his or her life, as he or she shall 
nominate by written designation, duly acknowledged, and filed with the 
retirement board, at the time of his or her retirement. 

Option 2. — Upon his or her death, his employe's annuity, his State an- 
nuity, or his or her retirement allowance shall be continued throughout the 
life of and paid to such person, having an insurable interest in his or her 
life, as he or she shall nominate by written designation, duly acknowl- 
edged, and filed with the retirement board, at the time of his or her 
retirement. 

Option 3. — Upon his or her death, one-half of his or her employe's 
annuity, his or her State annuity, or his or her retirement allowance shall 
be continued throughout the life of and paid to such person, having an 
insurable interest in his or her life, as he or she shall nominate by v.-ritten 
designation, duly acknowledged, and filed with the retirement board, at 
the time of his or her retirement. 

Option 4. — Some other benefit or benefits shall be paid to either the 
contributor or such other person or persons as he or she shall nominate; 
provided such other benefit or benefits shall, together with such lesser 
employe's annuity, or lesser State annuity, or lesser retirement allowance, 
be certified by the actuary of the retirement board to be of equivalent 
actuarial value, and shall be approved by the retirement board. 

MONTHLY PAYMENTS 

Section 16. An employe's annuity, a State annuity, or a retirement al- 
lowance, granted under the provisions of this act, shall be paid in equal 
monthly instalments, and shall not be increased, decreased, revoked, or 
repealed except as otherwise provided in this act. 

STATE SUPERVISION 

Section 17. The various funds created by this act shall be subject to the 
supervision of the State Department of Insurance. 

EXEMPTIONS FROM EXECUTION 

Section 18. The right of a person to an employe's annuity, a State an- 
nuity, or retirement allowance, to the return of contributions, any benefit 
or right accrued or accruing to any person under the provisions of this 
act, and the moneys in the various funds created under this act, are 
hereby exempt from any State or municipal tax, and exempt from levy 
and sale, garnishment, attachment, or any other process whatsoever, and 



585 



Teachers' Pension Systems in the United States 

shall be unassignable except as in this act specifically otherwise provided. 

Section 19. Any person who shall knowingly make any false statement, 
or shall falsify or permit to be falsified any record or records of this 
retirement system, in any attempt to defraud such system as a result of 
such act, shall be guilty of a misdemeanor, and shall be punishable for 
such under the laws of the Commonwealth of Pennsylvania. Should any 
such change in records or any mistake in records result in any employe 
or beneficiary receiving from the retirement system more or less than 
he or she would have been entitled to receive had the records been cor- 
rect, then, on the discovery of any such error, the retirement board, shall 
correct such error, and, so far as practicable, shall adjust the payments 
which may be made for and to such person in such a manner that the 
actuarial equivalent of the benefit to which he or she was correctly entitled 
shall be paid. 

Section 20. This act shall take effect immediately. 

Approved, the i8th day of July, A. D. 1917. 

(d) Connecticut 

Laws of 1917, Chapter 411 — An Act to Establish a Retirement System 

for Public School Teachers 

CONSTRUCTION 

Section i. The following words and phrases as used in this act, unless 
a different meaning is plainly required by the context, shall have the 
following meanings : 

(i) "Retirement system" shall mean the arrangement provided in this 
act for payment of annuities and pensions to teachers. 

(2) "Annuities" shall mean payments for life derived from contribu- 
tions from teachers. 

(3) "Pensions" shall mean payments for Hfe derived from contribu- 
tions from the State. 

(4) "Teacher" shall mean any teacher, principal, supervisor, or superin- 
tendent engaged in the service of the public schools. 

(5) "Public school" shall mean any day school conducted within this 
State under the order and superintendence of a duly elected school com- 
mittee or board of education, including the state board of education. 

(6) "Regular interest" shall mean interest, at the rate determined by 
the retirement board, and shall be substantially that which is actually 
earned by the funds of the retirement association, compounded annually 
on the last day of December of each year. 

(7) "Retirement board" shall mean the teachers' retirement board, as 
provided in section four of this act. 

(8) "Retirement association" shall mean the teachers' retirement asso- 
ciation, as provided in section three of this act. 

(9) "Expense fund" shall mean the fund provided for in paragraph 
numbered one in section five of this act. 

(10) "Annuity fund" shall mean the fund provided for in paragraph 
numbered two in section five of this act. 

(11) "Pension fund" shall mean the fund provided for in paragraph 
numbered three in section five of this act. 

(12) "School year" shall mean the twelve months from the first day 
of July of any year to the thirtieth day of June next succeeding. 

(13) "Assessments" shall mean the annual payments to the annuity 
fund by members of the association. 

(14) The masculine pronoun shall be held to refer to either sex or 
both sexes as the context may require. 

386 



Appendices 



ESTABLISHMENT OF A TEACHERS RETIREMENT SYSTEM 

Section 2. A teachers retirement system shall be established on the first 
day of July, nineteen hundred and seventeen. 

TEACHERS' RETIREMENT ASSOCIATION 

Section 3. A teachers' retirement association shall be organized among 
the teachers in the public schools as follows : 

(i) All teachers who enter the service of the public schools for the 
first time on or after July first, nineteen hundred and seventeen, shall 
become thereby members of the association. 

(2) All teachers, who shall have entered the service of the public 
schools before June thirtieth, nineteen hundred and seventeen, may at 
any time between July first, nineteen hundred and seventeen, and Sep- 
tember thirtieth, nineteen hundred and seventeen, upon application in 
writing to the secretary of the state board of education, become members 
of the retirement association. Any such teacher failing to do so may 
thereafter become a member of the retirement association by paying 
an amount equal to the total assessments, together with regular interest 
thereon, that he would have paid if he had joined the retirement associa- 
tion on September thirtieth, nineteen hundred and seventeen. 

STATE teachers' RETIREMENT BOARD 

Section 4. (i) The management of the retirement system is hereby 
vested in the teachers' retirement board, which shall consist of five 
members. 

(2) The insurance commissioner for the state, the bank commissioner 
for the state and the secretary of the state board of education shall be 
members of this board. 

(3) As soon as possible after the passage of this act and not later than 
July first, nineteen hundred and seventeen, the governor shall appoint as 
members of the retirement board two persons from the teacliing force 
of the state, one to serve until July first, nineteen hundred and nineteen, 
and one to serve until July first, nineteen hundred and twenty-one. 

(4) On or before July first, nineteen hundred and nineteen and bi- 
ennially thereafter the members of the retirement association shall elect 
from among their number in a manner to be prescribed by the retirement 
board one person to serve upon the retirement board for a term of 
four years. 

(5) If a vacancy should occur in the positions filled by members 
of the retirement association, the retirement board shall elect a member 
of the retirement association to fill the unexpired term. 

(6) The members of the retirement board shall serve without com- 
pensation, but they shall be reimbursed from the expense fund of the 
retirement association for any expenditures or loss of salary or wages 
which they may incur through serving on this board. All claims for 
reimbursement on this account shall be subject to the approval of the 
governor. 

(7) The retirement board shall have power to make by-laws and regu- 
lations not inconsistent with the provisions of this act ; and to employ a 
secretary, who shall give a surety bond in such amount as the board shall 
approve, and clerical and other assistance as may be necessary. The 
salaries shall be paid by the board with the approval of the governor. 

(8) The retirement board shall provide for the payment of retirement 
allowances and such other expenditures as are required by the provisions 
of this act. 



387 



Teachers' Pension Systems in the United States 

(9) The retirement board shall adopt for the retirement system one or 
more mortality tables, and may from time to time modify such tables or 
prescribe other tables to represent more accurately the expense of the 
retirement system. 

(10) The retirement board shall perform such other functions as are 
required for the execution of the provisions of this act. 

CREATION OF FUNDS 

Section 5. The funds of the retirement system shall consist of an ex- 
pense fund, an annuity fund, and a pension fund. 

(i) The expense fund shall consist of such amounts as shall be appro- 
priated by the general assembly from year to year on estimates submitted 
by the retirement board to defray the expenses of the administration of 
this act, exclusive of the payment of retirement allowances. 

(2) The annuity fund shall consist of assessments paid by members 
of the retirement association, and interest derived from investments of 
the annuity fund. Each member of the retirement association shall pay 
into the annuity fund in the manner provided in section nine, paragraph 
five, of this act five per cent of his annual salary : provided, however, that 
when the total sum of assessments on the salary of any member at the 
rate of five per cent would amount to more than one hundred dollars or 
less than twenty-five dollars for any school year such member shall in 
lieu of assessments at the regular rate be assessed one hundred dollars 
a year or twenty-five dollars a year, as the case may be, payable in equal 
instalments to be assessed for the number of months during which the 
schools of the community in which such member is employed are com- 
monly in session. Any member of the retirement association who shall 
for thirty years have paid regular assessments to the annuity fund as 
herein provided, shall be exempt from further assessments ; but such 
member may thereafter if he so elects, continue to pay his assessments to 
the fund. No member so electing shall pay further assessments after the 
total sum of assessments paid by him shall at any time have amounted 
with regular interest, to a sum sufficient to purchase an annuity of five 
hundred dollars at age sixty; and interest thereafter accumulating shall 
be paid to the member at the time of his retirement. 

(3) The pension fund shall consist of such amounts as shall be appro- 
priated by the general assembly from time to time on estimates submitted 
by the retirement board, for the purpose of paying the pensions provided 
for in this act. 

PAYMENT OF RETIREMENT ALLOWANCES 

Section 6. (i) Any member of the retirement association may retire 
from service in the public schools on attaining the age of sixty years or 
on the completion of thirty-five years of service in the public schools of 
the state. 

(2) Any member of the retirement association, if incapable of render- 
ing satisfactory service as a teacher, may, with the approval of the retire- 
ment board, be retired by the employing school board on attaining the age 
of fifty-five years or at any time thereafter. 

(3) Any member of the retirement association on attaining the age of 
seventy years, shall be retired from service in the public schools ; provided, 
however, that if the employing committee shall so request in writing, the 
retirement board may permit the employment of such member beyond the 
age of seventy years ; and provided further, that on the retirement of such 
member he shall receive from the state the pension to which he would 
have been entitled at age seventy. 

388 



Appendices 

(4) A member of the retirement association after his retirement under 
the provisions' of paragraphs one, two and three of this section, shall be 
entitled to receive from the annuity fund, as he shall elect at the time of 
his retirement, on the basis of tables adopted by the retirement board: (a) 
an annuity, payable in quarterly payments, to which the sum of his assess-- 
ments under section five, paragraph two, with regular interest thereon, 
shall entitle him; or (b) an annuity of less amount, as determined by 
the retirement board for the annuitants electing such option, payable in 
quarterly payments, with the provision that on the death of the annuitant, 
the annuity shall be continued to and throughout the life of such person as 
he shall nominate by written designation duly acknowledged and filed 
with the retirement board at the time of his retirement. 

(5) The retirement board may ofifer other benefits of equal value with 
the benefits herein provided and the contributor retiring may accept either 
the benefits herein provided or one of said alternative benefits in lieu 
thereof. 

(6) Any member of the retirement association receiving payments of 
an annuity as provided in paragraphs four and five of this section shall, 
if not rendered ineligible therefor by the provisions of section eleven of 
this act, receive with each quarterly payment of his annuity an equal 
amount to be paid from the pension fund as directed by the retirement 
board. 

(7) Any teacher who shall have become a member of the retirement 
association under the provisions of paragraph numbered two of section 
three, and who shall have served fifteen years or more in the public schools 
of the state, not less than five of which shall immediately precede retire- 
ment, shall on retiring as provided in paragraphs one, two and three of 
this section, be entitled to receive a retirement allowance as follows : (a) 
such annuity and pension as may be due under the provisions of para- 
graphs, four, five and six of this section; (b) an additional pension to 
such an amount that the sum of this additional pension and the pension 
provided in paragraph six of this section shall equal the pension to which 
he would have been entitled under the provisions of this act if he had paid 
thirty assessments on his average yearly wage for the five years preced- 
ing his retirement with interest thereon at three percent compounded 
annually; provided (i) that if his term of service in the state shall have 
been over thirty years the thirty assessments shall be reckoned as having 
begun at the time of his entering service and as drawing interest at three 
percent compounded annually until the time of retirement; and further 
provided, (2) that if the sum of such additional pension together with 
the annuity and pension provided for by paragraphs four, five and six 
of this section is less than three hundred dollars in any one year, an 
additional sum sufficient to make an annual retirement allowance of three 
hundred dollars shall be paid from the pension fund. 

(8) If at any time it is impossible or impracticable to consult the 
original records as to wages received by a member during any period, the 
retirement board shall determine the pension to be paid under paragraph 
(7) (b) of this section in accordance with the evidence they may be able 
to obtain. 

WITHDRAWAL AND REINSTATEMENT 

Section 7 (i) Any member of the retirement association withdrawing 
from service in the public schools before becoming eligible to retirement 
shall be entitled to receive from the annuity fund all amounts contributed 
as assessments, together with regular interest thereon, in the manner here- 
inafter provided. 

(2) If such withdrawal shall take place before ten annual assessments 



389 



Teachers' Pension Systems in the United States 

have been paid, such member shall receive the total amount to which he 
is entitled as determined by the retirement board under the provisions 
of this act in one sum or in four quarterly payments as the retirement 
board may elect. 

(3) If such withdrawal shall take place after ten annual assessments 
have been paid, the amount so refunded shall be in the form of such 
annuity for life based on the contributions of such member, together with 
regular interest thereon, as may be determined by the retirement board 
according to its annuity tables, or in four annual instalments, as such 
member may elect. 

(4) If a member of the association withdrawing and receiving pay- 
ments in accordance with paragraphs two and three of this section, shall 
die before the amount of such payments equals the amount of his con- 
tributions to the annuity fund with regular interest, the difference between 
the amount of such payments and the amount of his contributions with 
regular interest shall be paid to his legal representatives ; if, however, 
no demand shall be made on the retirement board within six months fol- 
lowing the death of such member for the payment of the sums due under 
this paragraph, such sums, not exceeding one hundred dollars in any case 
may then be paid to such person or persons as are apparently entitled 
to the estate, and such payment shall be a bar to recovery by any other 
person. 

(5) Any member of the retirement association who shall have with- 
drawn from service in the public schools shall, on being re-employed in 
the public schools, be reinstated in the retirement association in accord- 
ance with such plans for reinstatement as the retirement board shall adopt. 

(6) If a member of the retirement association shall die before retire- 
ment, the full amount of his contributions to the annunity fund with 
regular interest to the day of his death shall be paid to his legal repre- 
sentatives ; if, however, no demand shall be made on the retirement board 
within six months following the death of such member, for the payment 
of the sums due under this paragraph such sums not exceeding one hun- 
dred dollars in any case, may then be paid to such person or persons as 
are apparently entitled to the estate, and such payment shall be a bar 
to recovery by any other person. 

TAXATION, ATTACHMENTS AND ASSIGNMENTS 

Section 8. That portion of the salary or wages of a member deducted 
or to be deducted under this act. the right of a member to an annuity or 
pension, and all his rights in the funds of the retirement system, shall 
be exempt from taxation, and from the operation of any laws relating 
to bankruptcy or insolvency, and shall not be attached or taken upon 
execution or other process of any court. No assignment of any right 
in, or to said funds shall be valid. The funds of the retirement system, 
so far as invested in personal property, shall be exempt from taxation. 

DUTIES OF THE SCHOOL COMMITTEE 

Section 9. (i) The school committee or hoard of education of each 
town, city, or district in the state shall, before employing in any teaching 
position any person to whom this act may apply, notify such person of 
his duties and obligations under this act as a condition of his employment. 

(2) On or before October first of each year the school committee or 
board of education of each town, city and district in the state shall certify 
to the retirement board the names of all teachers to whom this act shall 
apply. 

(3) The school committee or board of education of each town, city, and 



Appendices 

district in the state shall, on the first dav of each calendar month, 
notify the retirement board of the employment of new teachers, removals, 
withdrawals, and changes in salary of teachers that shall have occurred 
during the month preceding. 

(4) Under the direction of the retirement board the school committee 
or board of education of each town, city and district in the state shall 
furnish such other information as the board may require relevant to the 
discharge of the duties of the lioard. 

(5) The school committee or board of education of each town, city 
and district in the state shall, as directed by the retirement board, deduct 
from the amount of the salary due each teacher employed in the public 
schools of such town, city or district, such amounts as are due as contri- 
butions to the annuity fund as prescribed in this act, shall send to the 
treasurer of said town, city or district a statement as voucher for such 
deductions and shall send a duplicate statement to the secretary of the 
retirement board. 

(6) The school committee or board of education of each town, city and 
district in the state shall keep such records as the retirement board may 
require. 

CUSTODY AND INVESTMENT OF 'FUNDS 

Section 10. (i) The treasurer of each town, city and district in the 
state on receipt from the school committee or board of education of the 
voucher for deductions from the teachers' salaries provided for in sec- 
tion nine shall transmit, monthly, the amounts specified in such voucher 
to the secretary of the retirement board. 

(2) The secretary of the retirement board shall monthly pay to the 
treasurer of the state all sums collected by him under the provisions 
of paragraph one of this section. 

(3) All funds of the retirement system shall be in custody and charge 
of the treasurer of the state and the treasurer shall invest such funds as are 
not required for current disbursements in accordance with the laws of 
the state governing the investment of savings banks funds. He may, 
whenever he sells securities, deliver the securities so sold upon receiving 
the proceeds thereof, and may execute any or all documents necessary 
to transfer the title thereto. 

(4) The treasurer of the state shall make such payments to members 
of the retirement association from the annuity fund and pension fund 
as the retirement board shall order to be paid in accordance with sections 
six and seven of this act. 

(5) On or before the third Wednesday in January, the treasurer of the 
state shall file with the insurance commissioner for the state, and with the 
secretary of the retirement board, a sworn statement exhibiting the 
financial condition of the retirement system on the thirty-first day of 
the preceding December and its financial transactions for the year ending 
at such date. Such statement shall be in the form prescribed by the 
retirement board and approved by the insurance commissioner. 

MEMBERSHIP IN OTHER RETIREMENT ASSOCIATIONS 

Section 11. (i) No person required to become a member of the asso- 
ciation under the provisions of paragraph numbered one of section three 
of this act shall be entitled to participate in the benefits of any other 
teachers' retirement system, supported in whole or in part by funds raised 
by taxation. 

(2) No member of the retirement association shall be eligible to receive 



Teachers' Pension Systems in the United States 

any pension as described in section six of this act, who is at the time in 
receipt of a pension paid from funds raised in whole or part by taxation. 

REIMBURSEMENT OF CITIES AND TOWNS 

Section 12. (i) Whenever, after the first day of July, nineteen hundred 
and seventeen, a town, city or district retires a teacher who is not eligible 
to a pension under the provisions of paragraph numbered six in section six 
of this act, and pays to such teacher a pension and the school committee 
or board of education of said town, city or district certifies under oath 
to the retirement board to the amount of said pension, said town or city 
shall be reimbursed therefor biennially by the state : provided, that no such 
reimbursement shall be in excess of the amount as determined by the 
retirement board, to which said teacher would have been entitled as a 
pension, had he become a member of the retirement association under 
the provisions of paragraph numbered two in section three of this act. 

(2) On or before the first Wednesday of January, nineteen hundred 
and nineteen and biennially thereafter the retirement board shall present 
to the general assembly, a statement of the amount expended during the 
two years ending on the preceding first day of July by cities and towns 
in the payment of pensions under the provisions of the preceding para- 
graph, for which such cities and towns should receive reimbursement. 
On the basis of such a statement, the general assembly may make an 
appropriation for the reimbursement of such cities and towns up to such 
first day of July. 

New Jersey 

Laws of 1919. Chapter 80 (e), an Act to amend "An act to establish a 

thorough and efficient system of free public schools, and to provide 

for the maintenance, support and management thereof," 

approved October nineteenth, one thousand 

nine hundred and three. 

Be IT ENACTED by the Senate and General Assembly of the State of 
New Jersey. 

PREAMBLE 

Whereas, In the advancement of public policy there has been established 
in this State a retirement fund to which public school teachers are re- 
quired to contribute and which was designed to provide an annuity to 
any member disabled after twenty or more years of service, and the 
State has provided a non-contributory pension for any teacher who 
teaches thirty-five years ; and 

Whereas After two years of investigation conducted with the assistance 
of pension experts and actuaries employed by it, the Pension and Re- 
tirement Fund Commission created by the act of the Legislature, J. R. 
II, P. L. 1917, and J. R. 3, P. L., 1918, has found that the two retirement 
systems conflict with each other in their operation and thereby create 
embarrassment in the administration of school affairs, and in many in- 
stances give double retirement benefits to the teachers, amounting on 
an average to more than the salary received by the teachers when in 
active service; and 

Whereas, The actuary employed by the State Teachers' Association and 
the actuary of the commission both report that the liabilities of the 
Teachers' Retirement Fund are far in excess of its present and pros- 
pective assets, which indicates that the contributions of present teachers 
are being used for the payment of annuities to teachers now retired. 



Appendices 

thereb}^ exhausting the funds which should be kept in reserve for the 
benefit of present teachers, with the result that a majority of those now 
contributing will be unable to receive the benefits promised under the 
fund ; and 

Whereas, Inasmuch as the State of New Jersey by legislative enactment 
has compelled its teachers to contribute to this fund which is in an un- 
sound financial condition, it is the duty of the Legislature to correct as 
far as possible the injustice and embarrassment occasioned by such 
conditions, which are detrimental to the welfare of the teachers and the 
school system ; and 

Whereas, It is recognized as an established State policy that the teachers 
of our public schools should be given protection against disability and 
old age and that such protection should be provided by a retirement 
system established on a scientific basis that will truly advance the best 
interests of our educational system and protect the future well being 
of the teachers ; therefore, 
I. The act to which this act is an amendment is hereby amended by the 

addition of a new article, which shall be known as Article XXVIII, and 

which shall contain sections 247 to 256, inclusive. 

ARTICLE XXVIII 

teachers' pension and annuity fund 
definitions 

247. (i) The following words and phrases used in this act shall ha"e 
the following meanings unless a different meaning is plainly required by 
the context : 

(2) "Retirement System," shall mean the "Teachers' Pension and 
Annuity Fund," created by section two hundred and forty-eight of this 
article. 

(3) "Teachers' Retirement Fund" shall mean the Teachers' Retirement 
Fund of the State of New Jersey as created by chapter 32, P. L. 1896; 
chapter 178, P. L. 1899; chapter 96, P. L. 1900; chapter 36, P. L. 1902; 
chapter i, Second Special Session P. L. 1903; chapter 95, P. L. 1905; 
chapter 314, P. L. 1906; chapter 139, P. L. 1907, and amendments thereto 
and supplements thereof. 

(4) "Board of Trustees" shall mean the board provided for in section 
two hundred and fifty-five of this article. 

(5) "Commissioner of Education" shall mean the Commissioner of 
Education of the State of New Jersey. 

(6) "Employer" shall mean the State of New Jersey, or the school 
district, normal school district, board or other agency of and within the 
State by which the teacher is paid. 

(7) "Teacher" shall mean any regular teacher, special teacher, helping 
teacher, teacher-clerk, principal, vice-principal, supervisor, supervising 
principal, director, superintendent, city superintendent, assistant city super- 
intendent, county superintendent. State commissioner or assistant com- 
missioner of education and other member of the teaching or professional 
staff of any class, public school, high school, normal school, model school, 
training school, vocational school, truant reformatory school, or parental 
school, and of any and all classes or schools within the State of New 
Jersey conducted under the order and superintendence, and wholly or 
partly at the expense of the State Board of Education, of a duly elected 
or appointed board of education, board of school directors, or board 
of trustees of the State or of any school district or normal school district 
thereof, and any such person under contract or engagement to perform one 

393 



Teachers' Pension Systems in the United States 

or more of these functions; provided, that no person shall be deemed 
a teacher within the meaning of this article who is a substitute teacher 
or is a teacher not regularly engaged in performing one or more of these 
functions as a full-time occupation outside of vacation periods. In all 
cases of doubt the board of trustees shall determine whether any person 
is a teacher as defined in this article. 

(8) "Present-entrant" shall mean any teacher who is a member of 
the retirement system under the provisions of class B, C, D and E under 
sub-section (2) of section two hundred and forty-nine of this article. 

(9) "New-entrant" shall mean any teacher who is a member of the 
retirement system, except a present entrant. 

(10) "Contributor" shall mean any person who has an account in the 
annuity savings fund. 

(11) "Beneficiary" shall mean any person in receipt of a retirement 
allowance or other benefit as provided in this article. 

(12) "School Service" shall mean any service as a teacher as defined 
by sub-section (7) of this section. 

(13) "School Year" shall mean the official school year of the school 
district or the institution in which a teacher is employed. 

(14) "Regular Interest" shall mean interest at four per centum per 
annum, compounded annually. 

(15) "Accumulated Deductions" shall mean the total of the amounts 
deducted from the salary of a contributor and credited to his individual 
account in the annuity savings fund together with the interest thereon. 
Regular interest shall be computed and allowed on such total or part 
thereof when used for the purchase from the retirement system of a re- 
tirement annuity. Interest at the rate of three and one-half per centum 
per annum, compounded annually, shall be computed and paid on such 
total amounts or part thereof when withdrawn for any other purpose. 

(16) "School Apportionment Fund" shall mean the moneys retained 
in the State Treasury to be apportioned to the several counties of the 
State by the Comptroller for school purposes, as defined in chapter 146, 
P. L. 1906, and chapter 65, P. L. 1909. 

(17) "Average Salary" shall mean the average annual salary earnable 
by and as a teacher for the last five years preceding retirement. 

(18) "Pension" shall mean annual payments for life derived from 
the pension fund or from the pension reserve fund as provided in this 
article. All pensions shall be paid in monthly installments. 

(19) "Annuity" shall mean payments for life derived from contribu- 
tions made by a contributor as provided in this article. All annuities shall 
be paid in monthly installments. 

(20) "Retirement Allowance" shall mean the pension plus the 
annuity. 

(21) "Pension Reserve" shall mean the present value computed on 
the basis of such mortality tables as shall be adopted by the board of 
trustees, with regular interest of the future payments to be made on 
account of any pension granted to a member. 

(22) "Annuity Reserve" shall mean the present value commuted on the 
basis of such mortality tables as shall be adopted by the board of trustees 
with regular interest of the future payments to be made on account of any 
annuity granted to a member. 

ESTABLISHMENT OF SYSTEM 

248. (i) A retirement system for public school teachers is hereby 
created and established to be known as the "Teachers' Pension and 
Annuity Fund," and shall include the several funds created and placed 

394 



Appendices 

under the management of the board of trustees as provided by this article 
for the purpose of paying retirement allowances and other benefits here- 
inafter provided to or on account of the teachers who become members of 
said system. 

(2) The retirement system so created shall have the powers and 
privileges of a corporation, and under its corporate name all its business 
shall be transacted, all funds invested, all warrants for money drawn and 
payments made, and all cash and securities and other property shall be held. 

MEMBERSHIP 

249. (i) Membership in the retirement system shall begin not earlier 
than the first day of September, nineteen hundred and nineteen. 

(2) The membership of the retirement system shall consist of the 
following classes of teachers : 

Class A. All persons who become teachers after the first day of 
Sep(tember, nineteen hundred and nineteen, and whose appointment 
is made subsequent to the passage of this act, shall become members of 
the retirement system by virtue of their appointment as teacher; provided, 
that any person who may become a teacher after September first, nineteen 
hundred and nineteen, who before the passage of this act shall have made 
an agreement to teach in the schools of this State as a consideration for 
the instruction received in any normal school of the Stale shall not be 
compelled during the life of such agreement to become a member of the 
retirement system when he shall enter the service as a teacher, but shall, 
however, become a member after the expiration of such agreement by 
virtue of any subsequent appointment as teacher, but he may become a 
member at any time by filing an application as hereinafter described; 
provided, further, that any person who shall have signed a contract for 
the position of a teacher prior to the passage of this act, whose services 
thus contracted for shall extend beyond the first day of September, nine- 
teen hundred and nineteen, shall not be compelled to become a member 
of the retirement system when he shall enter the service under such 
contract as a teacher, but he may do so by filing an application as herein- 
after described. 

Class B. All teachers in the service on September first, nineteen hun- 
dred and nineteen, who are not members of the Teachers' Retirement 
Fund at the time of the passage of this act, who, during their service as 
a teacher on or before the first day of September, nineteen hundred and 
twenty, shall file with the board of trustees an application for membership. 

Class C. All teachers in the service on September first, nineteen hun- 
dred and nineteen, who became members of the Teachers' Retirement 
Fund by virtue of their appointment as teacher since January first, nine- 
teen hundred and eight, who during their service as a teacher on or before 
the first day of September, nineteen hundred and twenty, shall file with 
the board of trustees an application for membership. 

Class D. All teachers in the service on September first, nineteen 
hundred and nineteen, who became members of the Teachers' Retirement 
Fund before the first day of January, nineteen hundred and eight, and 
who during their service as a teacher on or before the first day of Septem- 
ber, nineteen hundred and twenty, shall file with the board of trustees an 
application for membership. 

Class E. All teachers, who do not come under the provisions of class 
A, B. C or P, who within a year after their appointment or after the 
passage of this act, shall file with the board of trustees an application for 
membership. 

395 



Teachers' Pension Systems in the United States 

(3) Application for membership under class B, C, D and E, and the 
certificate of enrollment in case of class A member, shall be in such form 
and contain such information as the board of trustees shall designate, 
and furthermore, the application for membership in case of class C, D 
and E shall contain a waiver of all rights and privileges as a member 
or prospective beneficiary of the Teachers' Retirement Fund. 

The board of trustees shall file one copy of the application for member- 
ship or certificate of enrollment in the retirement system as a permanent 
record in its office, and one copy with the employer of the applicant, which 
shall constitute a notice to such employer to deduct the percentage of salary 
as defined by this article. 

(4) The board of trustees may, in its discretion, extend the period 
for filing any application for membership provided for herein, but no 
extension shall carry the date beyond the year nineteen hundred and 
twenty three. 

(5) Any teacher who does not elect to become a member while eligible 
to membership under the provisions as to class B, C, D or E, and who is 
not eligible to membership under the provisions as to class A, may become 
a member thereafter upon application in accordance with the rules and 
regulations of the board of trustees, but with a limited allowance for prior 
service as hereinafter provided for new-entrants. 

(6) This board of trustees may, in its discretion, deny the right to 
become members to any class of teachers whose compensation is only 
partly paid by the State, or who are serving on a temporary or any other 
than a per annum basis, and it may also, in its discretion, make optional 
with members in any such class their individual entrance into membership. 

(7) The membership of any person in the retirement system shall cease 
if he shall be continuously absent without pay for a period of more than 
two years, or if in any five-year period after he last became a member, he 
shall render less than two years of school-service, or upon the withdrawal 
by a contributor of his accumulated deductions as provided in this 
article or upon retirement on a pension, or at death but not otherwise, ex- 
cept as provided in this article. 



SERVICE CREDITABLE 

250. (i) In addition to the application required in subsection (3) 
of section two hundred and forty-nine of this article each present-entrant 
shall file a detailed statement under oath of all school-service and service 
in a similar capacity in other States rendered by him prior to the first 
day of September, nineteen hundred and nineteen, for which he claims 
credit, and of such other facts as the board of trustees may require 
for the proper operation of the retirement system. 

(2) Each new-entrant shall file a detailed statement of school-service 
and service in a similar capacity in other States rendered by him prior 
to so becoming a member for which he desires credit and on account 
of which he desires to contribute and of such other facts as the board of 
trustees may require for the proper operation of the system. 

(3) The board of trustees shall fix and determine by appropriate 
rules and regulations how much service in any year is the equivalent 
of a year of service, but in computing such service, or in computing 
average compensation, it shall credit no time during which a member 
was absent without pay for a period of more than a month's duration, 
nor shall more than one year of service be credited for all service in any 
calendar year. 



396 



Appendices 

(4) Subject to the above restrictions and to such other rules and 
regulations as the board of trustees shall adopt, said board shall verify as 
soon as practicable the statement of service submitted, and shall issue to 
the member a prior- service certificate certifying to the aggregate length of 
such prior service. 

(5) In such prior-service certificate, a present-entrant shall be credited 
up to the nearest number of years and months with all service not 
exceeding thirty-five years, which he rendered as a teacher prior to 
September first, nineteen hundred and nineteen, including not more than 
ten years of service in a similar capacity in other States. 

(6) In his prior-service certificate, a new-entrant shall be credited in 
full up to the nearest number of years and months, but not e.xceeding 
ten years, with all service rendered by him as a teacher in public schools 
in or outside of New Jersey prior to becoming a member, for which he 
desires credit and on account of which he desires to contibute. 

(7) So long as membership continues, a prior-service certificate shall 
be final and conclusive for retirement purpose as to such service, unless 
thereafter modified by the board of trustees upon the application made by 
the member within one year after the date of issuance or modification 
of a prior-service certificate or upon the discovery by the board of trustees 
of an error or fraud. When membership ceases, such certificate shall be 
void, but upon membership being resumed the prior-service certificate 
shall be restored for the same number of years of prior service as were 
previously credited less a deduction of one year for each year during 
which the teacher was not a member of the retirement system since the 
issuance of the initial prior-service certificate. 

(8) At retirement the total service credited a member shall consist 
of the service rendered by him during his membership, and if he has a 
prior-service certificate which is in full force and effect, for all service 
certified on such certificate. 

BENEFITS 

Superannuation Retirement. 

251. (i) A member who has attained the age of sixty-two (62) may 
retire upon his request or, upon the request of his employer, shall be re- 
tired from the service if a written statement duly attested is filed by him 
or by his emploj'er with the board of trustees setting forth at what time 
subsequent to the execution and filing thereof he or his employer desires 
such retirement. The board of trustees shall retire said member at the 
time specified or at such other time within thirty days after the date so 
specified as the board of trustees may find advisable. Any present-entrant 
who is not covered by the tenure of ofiice law who prior to the first day 
of November, one thousand nine hundred and nineteen, shall become a 
member of the retirement system, and who shall be credited in his prior- 
service certificate with thirty-five or more years of service, who shall 
lose his position before attaining the age of sixty-two (62) years, shall 
be retired on a total retirement allowance of one-half of his average salary. 

(2) After the first day of January of the year nineteen hundred and 
twenty-six, each and every member who has attained or shall attain the 
age of seventy (70) shall be retired by the board of trustees from the 
service forthwith, or at such time within a year thereafter as it shall deem 
advisble. 

(3) Upon superannuation retirement a present-entrant shall receive a 
retirement allowance which shall consist of: 

(a) An annuity which shall be the actuarial equivalent of his ac- 
cumulated deductions at the time of his retirement. 

397 



Teachers' Pension Systems in the United States 

(b) A pension in addition to the annuity, of one one-hundred and 
fortieth (i/i40th) of his average salary multiphed by the number of 
years of service he has rendered since he became a member. 

(c) A further pension of one seventieth (i/7oth) of his average 
salary multiplied by the number of years of service certified on his prior- 
service certificate. 

(d) And if such person shall have been a member of the Teachers' 
Retirement Fund prior to his becoming a member of the retirement sys- 
tem, a further additional pension which shall be the actuarial equivalent 
of the contributions without interest, which he paid to the Teachers' 
Retirement Fund prior to the first day of September, nineteen hundred 
and nineteen, which he has not otherwise received. 

(4) Upon superannuation retirement a new-entrant shall receive a 
retirement allowance which shall consist of : 

(a) An annuity which shall be the actuarial equivalent of his ac- 
cumulated deductions at the time of his retirement, and 

(b) A pension, in addition to the annuity, of one one hundred and 
fortieth (i/i40th) of his average salary multiplied by the number of 
years of his total service. 

(5) The total retirement allowance granted to a person with twenty 
or more years of service who has attained the age of sixty-two (62) shall 
in no case be less than four hundred dollars per annum. 

Disability Retirement. 

(6) Retirement for disability of a teacher who is a member shall be 
made by the board of trustees upon the application of his employer or 
upon his own application or that of a, person acting in his behalf, on a 
disability allowance if he is under the age of sixty-two (62) years, pro- 
vided the board of trustees, after a medical examination of said member, 
made at the place of his residence within the State or other place mutually 
agreed upon, by a physician or physicians designated by said board, shall 
determine upon the basis of a report submitted by said physician or 
physicians that the said member is physically or mentally incapacitated 
for the performance of duty and that said member ought to be retired; 
and further provided, that the said member has rendered ten years of 
service as a teacher in New Jersey, and if he is a new-entrant, has also 
been a member of the retirement system for ten years. 

Should the applicant for a disability retirement be dissatisfied with the 
decision of the board of trustees, appeal may be made to the State Board 
of Education and the decision of the latter shall be final and binding 
upon all parties. 

(7) On retirement for disability, a teacher who is a member shall 
receive a retirement allowance which shall consist of : 

(a) An annuity which shall be the actuarial equivalent of his accumu- 
lated deductions at the time of his retirement : 

(b) A pension which together with his annuity provided under the 
paragraph immediately preceding shall be sufficient to produce a retire- 
ment allowance of one-seventieth of his average salary multiplied by the 
number of years of his total service but not less than three hundred 
dollars per annum or thirty per centum of said average salary, with the 
exception that in no case shall the allowance exceed nine-tenths of the 
rate of retirement allowance to which he might have been entitled had 
retirement been deferred until the age of sixty-tv/o (62). 

(c) And if such person shall have been a member of the Teachers* 
Retirement Fund prior to his becoming a member of the retirement sys- 



Appendices 

tern, a further additional pension, which shall be the actuarial equivalent 
of the contributions without interest, which he paid to the Teachers' 
Retirement Fund prior to the first day of September, nineteen hundred 
and nineteen, which he has not otherwise received. 

(8) Once each year during the first five years following the retire- 
ment of the teacher on a disability allowance and once in every three- 
year period thereafter, the board of trustees may, and upon his application 
shall, require any disability beneficiary who is under the age of sixty-two 
(62) years to undergo medical examination by a physician or physicians 
designated by the board of trustees, said examination to be made at the 
place of residence of said beneficiary or other place mutually agreed upon. 
Should such physician or physicians thereupon report and certify to the 
board of trustees that such disability beneficiary is not totally incapacitated 
either physically or mentally for the performance of duty and that such 
disability beneficiary is engaged in or is able to engage in a gainful occu- 
pation and should the board of trustees concur in such report, then the 
amount of his retirement allowance shall be reduced to an amount which, 
when added to the amount then earned by him shall not exceed the 
amount of his average salary. Should his earning capacity be later 
changed, then the amount of his retirement allowance may be further 
altered : provided, that the new retirement allowance shall not exceed 
the amount of the retirement allowance originally granted or an amount 
which when added to the amount earned by the beneficiary, exceeds the 
amount of his average salary. Should a disability beneficiary who is 
under the age of sixty-two (62) years refuse to engage in a gainful 
occupation when qualified so to do and further refuses a position in the 
public schools offered to him, the board of trustees may reduce his re- 
tirement allowance to half of its former rate. 

(9) Should any disability beneficiary, under the age of sixty-two (62) 
years, refuse to submit to a medical examination as provided under the 
subsection immediately preceding, his retirement allowance may be dis- 
continued until his withdrawal of such refusal, and should such refusal 
continue for one year, all his rights in and to such retirement allowance 
may be forfeited. 

(10) Should a disability beneficiary be restored to active service at a 
salary equal to that formerly received, his retirement allowance shall 
cease and he shall again become a member of the retirement system, 
and his annuity reserve shall be transferred from the annuity reserve 
fund to the annuity savings fund and credited to his individual account 
as a part of his accumulated deductions in the latter fund, and he shall 
contribute to the said fund thereafter in the same manner and at the 
same rate as he paid upon his disability. Upon his restoration to active 
service his pension reserve in the pension reserve fund shall be trans- 
ferred to the pension accumulation fund. His prior-service certificate 
on the basis of which his service was computed at the time of his re- 
tirement shall be renewed and shall again be in full force and effect, and 
in addition upon his subsequent retirement he shall be credited with all 
his service as a member subsequent to the period covered by his prior- 
service certificate, anything to the contrary in this act notwithstanding. 
Withdrawal and Death Benefits. 

(11) A contributor who withdraws from service or ceases to be a 
teacher for any cause other than death or retirement, shall be paid on 
demand the accumulated deductions standing to the credit of his indi- 
vidual account in the annuity savings fund. 

399 



Teachers' Pension Systems in the United States 

(12) The board of trustees may, in. its discretion, withhold for not 
more than one year after a member last rendered school-service all or 
part of his accumulated deductions, if, before he last became a member, 
he withdrew from the annuity savings fund all or part of his accumu- 
lated deductions and failed to redeposit such withdrawn amount to the 
credit of his individual account in such fund. 

(13) Should a contributor die before retirement his accumulated de- 
ductions shall be paid to his estate or to such person having an insurable 
interest in his life as he shall have nominated by written designation duly 
executed and filed with the board of trustees. 

Optional Benefits. 

(14) At the time of his retirement, any contributor may elect to re- 
ceive his benefits in a retirement allowance payable througout life, or he 
may on retirement elect to receive the actuarial equivalent at that time 
of his annuity, his pension or his retirement allowance in a lesser annuity, 
or a lesser pension, or a lesser retirement allowance, payable throughout 
life with the provision that : 

Option I. If he dies before he has received in payments the present 
value of his annuity, his pension or his retirement allowance as it was 
at the time of his retirement, the balance shall be paid to his legal repre- 
sentatives or to such person having an insurable interest in his life as he 
shall nominate by written designation duly acknowledged and filed with 
the board of trustees. 

Option 2. Upon his death, his annuity, his pension or his retirement 
allowance shall be continued throughout the life of and paid to such person 
having an insurable interest in his life as he shall nominate by written 
designation duly acknowledged and filed with the board of trustees at the 
time of his retirement. 

Option 3. Upon his death, one-half of his annuity, his pension or his 
retirement allowance shall be continued throughout the life of and paid 
to such person having an insurable interest in his life as he shall nominate 
by written designation duly acknowledged and filed with the board of 
trustees at the time of his retirement. 

Option 4. Some other benefit or benefits shall be paid either to the 
member or to such person or persons as he shall nominate, provided 
such other benefit or benefits, together with the lesser annuity or lesser 
pension or lesser retirement allowance, shall be certified by the actuary 
to be of equivalent actuarial value to his annuity, his pension or his retire- 
ment allowance and shall be approved by the board of trustees. 
Benefits of Teachers Now Retired. 

(15) All pensions payable prior to the month of September, nineteen 
hundred and nineteen, by the State under the provisions of chapter 268, 
P. L. 1914, shall, beginning with said month, be paid from the pension 
fund created by this article and all such pensions as are below four 
hundred dollars shall be increased to and be paid at the rate of four 
hundred dollars. 

(16) Should the Teachers' Retirement Fund by reason of insolvency or 
liquidation cease to pay in full the annuities granted and therefore paid 
by said fund, there shall be paid out of the pension fund created by this 
article to persons who shall have been annuitants of said Teachers' Retire- 
ment Fund from a date prior to the ficst day of September, nineteen 
hundred and nineteen, such part or all of such annuities as the said 
Teachers' Retirement Fund shall have ceased to pay; provided, that 
neither all nor any part of the amount of any reduction in the annuity 
therefore payable by the said Teachers' Retirement Fund shall be paid 

400 



Appendices 

out of the said pension fund, unless there is in effect a corresponding and 
proportionate reduction by the said Teachers' Retirement Fund in the 
annuity of, and payment thereof to, each and every person retired by 
the Retirement Fund ; provided, further, that the board of trustees shall 
be the sole judge as to whether the amount of any allowance which 
would thereby become payable out of the pension fund corresponds to the 
amount of a reduction by the Teachers' Retirement Fund in the allowance 
of the same person due to the insolvency or liquidation of said fund. 



ACTUARIAL BASIS 

252. (i) Immediately after the establishment of the retirement system, 
the actuary of the board of trustees shall make such investigation of the 
mortality service and compensation experience of the teachers of the 
State of New Jersey as he shall recommend, and the board of trustees 
shall authorize, for the purpose of determining the proper tables for the 
purposes of the system. On the basis of such investigation and recom- 
mendation the board of trustees shall adopt such tables and certify such 
rates as are required in paragraphs (a), (b), and (c) of sub-section (2) 
of this section. On the basis of such tables as the board of trustees shall 
adopt, the actuary, as soon as practicable, shall make a valuation of the 
assets and liabilities of the funds created by this article. 

(2) In the years nineteen hundred twenty-one and nineteen hundred 
and twenty-four, and once in every five-year period thereafter, the said 
actuary shall make an actuarial investiagtion into the mortality, service 
and compensation or salary experience of the members and beneficiaries of 
the retirement system, and shall make a valuation of the assets and liabili- 
ties of the various funds thereof, and upon the basis of such investigation 
and valuation the board of trustees shall : 

''a) adopt for the retirement system such mortality, service and other 
tables as shall be deemed necessary; 

(b) certify the rates of deduction from compensation computed to be 
necessary to pay the annuities authorized under the provisions of this 
article; and 

(c) certify the rates of contribution, expressed as a proportion of 
the compensation of members at various ages, which shall be made to the 
pension accumulation fund. 

FUNDS CREATED, CONTRIBUTIONS THERETO AND PAYMENTS THEREFROM 

253. d) The funds created are: (a) the annuity savings fund; (b) 
the annuity reserve fund; (c) the pension fund; (d) the pension accumula- 
tion fund; (e) the pension reserve fund; (f) the expense fund. 

Funds Derived from Members' Contributions. 

(2) The annuity savings fund shall be the fund in which shall be 
accumulated deductions from the compensation of contributors. 

(3) Upon the basis of such tables as the board of trustees shall adopt, 
and regular interest, the actuary of the board of trustees shall determine 
for each contributor the proportion of compensation, which when deducted 
from each payment of his prospective earnable compensation prior to his 
eligibility for service retirement and accumulated at regular interest until 
his attainment of the age of sixty-two (62) shall be computed to be 
sufficient to provide at that time an annuity equal to the pension then 
allowable under the provisions of this article for service rendered 
during his membership, and in case the said member is a new-entrant 
for such prior service as he both claimed and was allowed. The pro- 

401 



Teachers' Pension Systems in the United States 

portion of compensation shall be computed to remain constant until the 
member attains the age of sixty-two (62) years. The proportion com- 
puted for a contributor entering at the age of sixty-one (61) shall be 
applied to any contributor who has attained a greater age at the time 
of entrance into the retirement system. 

(4) The board of trustees shall certify to each employer and the said 
employer shall deduct from the compensation of each member on each 
and every payroll for each and every payroll period subsequent to the date 
upon which such certification becomes effective, the per centum of his 
earnable compensation so computed. But the board of trustees shall not 
certify, nor shall any employer make, any deduction for annuity purposes 
from the compensation of a member who has attained the age of sixty-two 
(62) and completed thirty-five (35) years of service, if such member 
elects not to contribute. 

(5) In determining the amount earnable by a contributor in a pay- 
roll period, the board of trustees may consider the rate of compensation 
payable to such member on the first day of the payroll period as continu- 
ing throughout such payroll period, and it may omit deductions from 
compensation for any period less than full payroll period if a teacher 
was not a contributor on the first day of the payroll period, and to 
facilitate the making of deductions it may modify the deduction required 
of any contributor by such an amount as shall not exceed one-tenth of one 
per centum of the compensation upon the basis of which said deduction 
is to be made. 

(6) In lieu of any part of the deduction from compensation herein- 
before required, any new-entrant may deposit in the annuity savings fund 
by a single payment such an amount as will be sufficient to permit him 
to contribute the rate of contributions applicable to an earlier entrance 
age. In addition to the deductions from compensation hereinbefore re- 
quired any contributor may redeposit in a single payment an amount 
equal to the total amount which he withdrew therefrom as provided in 
this article, or he may deposit therein by a single payment an amount 
computed to be suflficient together with the retirement allowance other- 
wise provided, to provide for him a total retirement allowance of one- 
half of his final salary at the age of sixty-two (62). Such additional 
amounts so deposited shall become a part of his accumulated deductions. 

(7) The accumulated deductions of a contributor withdrawn, as pro- 
vided in this article, shall be paid out of the annuity savings fund. In 
the case of a withdrawal, an amount equivalent to the difference between 
the amount of the accumulated deductions calculated at regular interest 
and the amount of the accumulated deductions calculated by use of 
interest at the rate of three and one-half per centum per annum com- 
pounded annually shall be transferred to the expense fund. 

(8) The annuity reserve fund shall be the fund from which shall be 
paid all annuities and all benefits in lieu of annuities. Upon the retire- 
ment of a contributor his accumulated deductions shall be transferred 
from the annuity savings fund to said annuity reserve fund 

FUNDS DF.RIVICD FROM CONTRIBUTIONS FROM SCHOOL APPORTIONMENT FUND 
PENSION FUND 

(9) The pension fund shall be the fund in which shall be accumulated 
the reserves for the payment of pensions to present-entrants ; into which 
the moneys necessary for the payment of all other pensions with the 
exception of those payable to new-entrants shall be paid ; and from which 
all pensions with the exception of those payable to new-entrants shall be 
paid. 

402 



Appendices 

(lo) The actuary, after making the first valuation required, shall 
determine the present value of the liability on account of pensions to 
present-entrants then retired or to be retired. He shall then determine 
the percentage of the total compensation paid to all members for 
service during the preceding school year, which is equivalent to one- 
twenty-fifth of the said liability. 

(ii) The State Comptroller shall pay annually, beginning with the 
year nineteen hundred and twenty, from the school apportionment fund 
into the pension fund the amount as certified to him by the board of 
trustees, which shall be equal to the per centum, determined in accordance 
with this subsection and the subsection immediately preceding, of the 
total compensation paid to all members for service during the preceding 
school year. 

Each annual payment shall be at least three per centum greater than 
the preceding annual payment. In every case, the amount shall be suf- 
ficient, when combined with that in the fund to provide the pensions 
payable out of this fund during the year then current, and shall be 
equal to at least one-twenty-fifth of the liability on account of present- 
entrants now retired or to be retired. The State Comptroller shall con- 
tinue such payments until the accumulated reserve in the pension fund 
equals the present value, as computed by the actuary and aDoroved by the 
board of trustees, of all pension payments thereafter payable on account 
of present-entrants, then retired or to be retired on a pension as 
provided in this article. 

(12) To pay the pensions provided under subsections (15) and (16) 
of section two hundred and fifty-one, the board of trustees shall annually 
prepare an estimate of the amounts required therefor and the State 
Comptroller shall pay from the school apportionment fund into the 
pension fund for this purpose the amounts required. 

(13) All moneys appropriated for the payment of pensions to public- 
school teachers under chapter 268, P. L. 1914, for the fiscal year beginning 
July, nineteen hundred and nineteen, less the amount disbursed for said 
pensions during the months of July and August, shall, on the first day of 
September, one thousand nine hundred and nineteen, be paid by the 
State Treasurer into the pension fund. 

PENSION ACCUMULATION FUND 

(14) The pension accumulation fund shall be the fund in which 
shall be accumulated the reserves necessary to pay all pensions to be 
granted to new-entrants. 

(15) In the month of July, nineteen hundred and twenty, for a period 
covering the ten months next preceding, and annually thereafter, covering 
the year next preceding the State Comptroller shall pay from the school 
apportionment fund into the pension accumulation fund on account of all 
new-entrants who were contributors for one or more months of such period 
immediately preceding, such amount as shall be certified by the board of 
trustees as necessary to provide thereby during their prospective active 
service the pension reserve required at the time of retirement for the 
disability or superannuation pension herein provided. The amount 
for each teacher included in the aggregate amount so certified shall 
be computed to bear a ratio to the salary earnable by such teacher 
during the period for which the amount is certified, which shall remain 
constant during his entire period of prospective active service and 
shall be based on such mortality and other tables as shall be adopted 
by the board of trustees and on regular interest. 

403 



Teachers' Pension Systems in the United States 



PENSION RESERVE FUND 

(i6) The pension reserve fund shall be the fund from which shall be 
paid all pensions, and all benefits, in lieu of pensions, granted to new- 
entrants. Upon the retirement of a new-entrant an amount equal to his 
pension reserve fund shall be transferred to said fund from the pension 
accumulation fund. 

(17) Should any disabiHty pension payable from said fund be can- 
celled, the pension reserve thereon shall thereupon be transferred from 
the pension reserve fund to the pension accumulation fund. Should the 
pension of a disability beneficiary be reduced as a result of an increase 
in his earning capacity, the amount of the annual reduction in his pension 
shall be paid annually into the pension accumulation fund during the 
period of such reduction. 



EXPENSE FUND 

(18) The expense fund shall be the fund from which the expense 
of the administration of the retirement system shall be paid exclusive of 
amounts payable as retirement allowances and as other benefits provided 
herein. 

(19) The board of trustees shall certify annually to the State Comp- 
troller the amount required to defray such expense in the ensuing fiscal 
year after making allowance for the estimated amounts to be received 
by the expense fund from the annuity savings fund, and the State Comp- 
troller shall pay from the school apportionment fund into the expense fund 
the amount so determined. 



COLLECTION OF CONTRIBUTIONS 

Collection of Members' Contributions : 

254. (i) Each employer shall keep such records, and from time to 
time, furnish such information as the board of trustees in the discharge of 
its duties may require. 

(2) Upon the employment of any teacher to whom this article may 
apply, he shall be informed by his employer of his duties and obligations 
in connection with the retirement system as a condition of his employ- 
ment. Every teacher accepting employment shall be deemed to consent 
and agree to any deductions from his compensation required herein and to 
all other provisions of this article. 

(3) Notwithstanding any other law, rule or regulation affecting the 
salary, pay, compensation, other perquisites or tenure of any teacher 
to whom this article applies, or shall apply, and notwithstanding that the 
niinimum salary, pay, compensation or other perquisites, provided by law 
for any such teacher shall be reduced thereby, payment less said deductions 
shall be a full and complete discharge and acquittance of all claims and 
demands whatsoever for service rendered by such member during the 
period covered by such payment. 

(4) When a teacher is employed by a school district, the custodian 
of school moneys and, in other cases, his employer shall notify the board 
of trustees within ten days after the appointment of a teacher of such 
appointment and shall deduct the proportion of salary as certified by the 
board of trustees from the salary of such teacher as herein directed, 
and shall certify to the Treasurer of the State of New Jersey on account 
of each and every payroll a statement as voucher for the amounts deducted 

404 



Appendices 

for annuity purposes at the rate certified by the board of trustees, shall 
send a duplicate of such statement to the board of trustees, and shall trans- 
mit or credit to the said State Treasurer the amount thereof. Any failure 
on the part of the custodian of school moneys of any school district 
to comply with the provisions of the subsection shall constitute a default, 
and the State Board of Education may withhold school moneys from 
such school district until such default is made good. 

(5) The State Treasurer shall credit the annuity savings fund with 
each amount transmitted or credited as provided in the subsection im- 
mediately preceding, and he shall transmit to the board of trustees 
monthly, or at such less frequent intervals as the board of trustees shall 
designate, a detailed statement of all amounts so paid in and credited by 
him to the annuity savings fund. 

The board of trustees shall cause each of such amounts so deducted 
to be credited in the annuity savings fund to an individual account of the 
member from whose compensation the deduction was made. 

Collection of Employers' Contributions : 

(6) Upon the basis of each actuarial determination and appraisal pro- 
vided herein, the board of trustees shall annually prepare and certify to 
the State Comptroller an estimate of the amounts necessary to be paid 
from school apportionment fund to the various funds for ensuing fiscal year. 

(7) The State Comptroller, prior to the apportionment, on or before 
the first day of February, among the several counties of the State of the 
funds devoted to the maintenance and support of a thorough and efficient 
system of free public schools, as provided in and by an act entitled "A 
supplement to an act entitled 'An act to establish a thorough and efficient 
system of free public schools, and to provide for the maintenance, support 
and management thereof,' approved October nineteenth, one thousand nine 
hundred and three," approved April twentieth, one thousand nine hundred 
and six, shall deduct from the moneys so to be apportioned, in addition 
to any other sums to be deducted from said fund by virtue of the 
provisions contained in any law of this State, the amount certified to him 
by the board of trustees as necessary to make the payments to the various 
funds of the retirement system from the School Apportionment Fund as 
provided herein for the then ensuing school year, and he shall pay such 
amounts into the various funds of the retirement system, on the first 
day of July following the certification. 

(8) If at any time no deductions shall have been made as required 
by the subsection immediately preceding, or if at any time the amount 
deducted shall not be sufficient to make the payments provided for herein, 
such payments shall be provided for by the Comptroller of the Treasury 
in making the then next deductions as required herein, and shall be in ad- 
dition to the sum certified to him by the board of trustees as necessary for 
the payments for the then ensuing school year. 

(9) To meet the expense of establishing and administering the retire- 
ment system created herein there is hereby appropriated from the school 
apportionment fund the sum of twenty-five thousand dollars ($25,000). 

(10) To meet the cost of pensions granted under chapter two hundred 
and sixty-eight, Laws of nineteen hundred and fourteen, assumed herein, 
and the cost of such annuities granted by the Teachers' Retirement Fund 
which are assumed herein, and shall be payable on or after the first 
day of July, nineteen hundred and nineteen, there is hereby appropriated 
from the school apportionment fund the sum of two hundred and fifty 
thousand dollars. The State Comptroller shall deduct such sum from the 

405 



Teachers' Pension Systems in the United States 

school apportionment fund in the same manner as provided by chapter 
sixty-five of the Laws of nineteen hundred and nine, and shall pay said sum 
into the pension fund created herein. 

ADMINISTRATION 

Board of Trustees. 

255. (i) The general administration and responsibility for the proper 
operation of the retirement system and for making effective the pro- 
visions of this article is hereby vested in a board of trustees, which shall 
be organized immediately after the passage of this act. The said board 
shall from time to time establish rules and regulations for the administra- 
tion and transaction of its business and for the control of the funds 
created herein, and shall perform such other functions as are required 
for the execution of the provisions of the retirement system. 

(2) The membership of the board of trustees shall consist of the 
following : 

(a) The Commissioner of Education of the State of New Jersey; Pro- 
vided, that the commissioner may appoint the assistant commissioner, who 
acts in his place during his absence, to serve in his stead. 

(b) The Treasurer of the State of New Jersey. 

(c) One trustee appointed by the Governor of the State of New 
Jersey to serve until the first day of September, nineteen hundred and 
twenty-one. His successor shall be appointed each for a term of three 
years. 

(d) Three trustees elected from among the mernbers of the retire- 
ment system, one to serve for one year, one to serve for two years 
and one to serve for three years from the first day of November follow- 
ing their election. One of such trustees shall be a resident of and em- 
ployed in either the county of Hudson, Essex or Bergen; one a resident 
of and employed in either the county oif Passaic, Sussex, Warren, Morris, 
Union, Hunterdon, Somerset, Middlesex, Mercer or Monmouth; and the 
third a resident of and employed in either the county of Ocean, Burling- 
ton, Camden, Gloucester, Salem, Cumberland, Atlantic or Cape May. Their 
successors shall be elected for a term of three years from among the 
members of the retirement system. 

(e) One trustee, not a teacher nor an officer of the State, elected by 
the other trustees, to serve until the first day of January, nineteen hundred 
and twenty-one, whose successor shall be elected in the same manner for 
a term of three years. 

A vacancy occurring in the board of trustees shall be filled for the un- 
expired term in the same manner as herein provided for regular appoint- 
ment or election. 

(3) Until the election of the three trustees from among the members 
of the retirement system the Commissioner of Education, the State 
Treasurer and the trustee appointed by the Governor, are empowered to 
perform the duties of the board of trustees. All rules and regulations 
adopted by them shall be subject to change by the entire board when the 
membership of such board shall be completely filled. 

(4) An annual convention of the retirement system shall be held at the 
State House in Trenton, at twelve o'clock, noon, on the second Saturday 
ill October each year, beginning with the year nineteen hundred and 
nineteen, for the purpose of electing members of the board of trustees 
of the retirement system, and receiving the report of said board of 
trustees and for the transaction of such other business as may properly 
be within its jurisdiction. Such convention shall be composed of delegates 
from each county in the State, selected as hereinafter provided. Said 
convention shall be called to order by a member of the board of trustees, 

406 



Appendices 

designated by said board, and shall organize by the election of a chairman 
and a secretary. Each county shall be entitled to be represented in such 
convention by one delegate for each two hundred members of the retire- 
ment system in said county and one delegate for any fraction over one 
hundred, provided, that each county shall be entitled to at least one 
delegate. Said delegate shall be elected by the vote of a majority of the 
members of the retirement system voting at a meeting held for the purpose 
of electing such delegates. Said meeting for the election of delegates 
shall be held at such convenient place as shall be selected by the county 
superintendent of schools. Notice of the time and place of said meeting 
shall be issued by said county superintendent at least ten days before the 
date of said meeting. Said meeting shall organize by the election of a 
chairman and secretary. Said secretary shall, within five days after said 
meeting, forward to the board of trustees of the retirement system a cer- 
tificate containing the names and addresses of the delegates elected to 
the annual convention, and shall furnish the delegates elected with a 
certificate of their election. In case of a vacancy in the delegation from 
any county, the remaining delegates from such county may fill such 
vacancy by appointing a member in said county, who shall possess the 
quahfications hereinbefore prescribed for delegates to such convention. 
A majority of all of the delegates entitled to seats in said convention shall 
constitute a quorum for the transaction of business. 
Administrative St?ff and Procedure. 

(5) Each member of the board of trustees shall, upon his appoint- 
ment or election, take an oath of office that, so far as it devolves upon 
him, he will diligently and honestly administer the affairs of the said 
board, and that he will not knowingly violate or willingly permit to be 
violated any of the provisions of law applicable to the retirement system. 
Such oath shall be subscribed to by the member making it, and certified 
by the officer before whom it is taken, and shall be immediately filed in 
the office of the Secretary of State. 

(6) Each trustees shall be entitled to one vote in the board. Four 
votes shall be necessary for a decision by the trustees at the meeting 
of said board. The board of trustees shall keep a record of all of its 
proceedings, which record shall be open to public inspection. 

(7) The board of trustees shall elect from its membership a chairman, 
shall engage such actuarial and other technical service, and shall ap- 
point such employees as may be necessary to transact the business 
of the retirement system. The actuary shall be the technical advisor 
of the board of trustees on matters regarding the operation of the 
funds created by the provisions of this article, and shall perform such 
other duties as are required in connection therewith. The Attorney- 
General of the State of Nevi^ Jersey shall be the legal advisor of 
the board of trustees. 

(8) The actuary of the board shall recommend and the board of 
trustees shall keep in convenient form such data as shall be necessary 
for actuarial valuation of the various funds of the retirement system. 

(9) The board of trustees shall publish annually a report showing 
a valuation of the assets and liabilities of the funds, certifying as to 
the accumulated cash and securities of the funds and giving an ac- 
count of the operation of the system. The said board shall submit 
said report to the Governor and shall furnish copies thereof to the 
office of the State Department of Education, the State Treasurer 
and to each employer for the use of the members and the public. 

(10) The members of the board of trustees shall serve without 
compensation, but shall be reimbursed from the expense fund for 
any necessary expenditures. No teacher shall suffer loss of salary 

407 



Teachers' Pension Systems in the United States 

or wages through serving on the board of trustees. Compensation 
for all other personal service to the retirement system shall be 
fixed by the board. 

(ii) The board of trustees shall establish itself in an office for 
the administration of the retirement system in such city as it shall 
consider most suitable for the transaction of its business. 

Management of Funds. 

(12) The board of trustees shall be the trustees of the several funds 
created by this article and shall have full power to invest the same, 
subject to all the terms, conditions, limitations and restrictions imposed by 
law upon investment of sinking funds in the making and disposing of 
their investments; and, subject to like terms, conditions, limitations 
and restrictions, said trustees shall have full power to hold, purchase, 
sell, assign, transfer or dispose of any of the securities and invest- 
ments in which any of the funds created herein shall have been in- 
vested, as well as of the proceeds of said investments and any moneys 
belonging to said funds. 

(13) The board of trustees shall annually allow regular interest 
on the mean amount for the preceding year in each of the funds, with 
the exception of the expense fund. The amount so allowed shall be 
due and payable to said funds, and shall be annually credited thereto 
by the board of trustees, from the interest and other earnings on the 
moneys of the retirement system. Any additional amount required to 
meet the interest on the funds of the retirement system shall be 
included in the amount certified to the State Comptroller as necessary 
to make the payments to the various funds of the retirement system 
from the school apportionment fund for the ensuing school year. 

(14) The Treasurer of the State of New Jersey shall be the cus- 
todian of the several funds. All payments from said funds shall be 
made by him only upon voucher signed by the chairman and counter- 
signed by such other person as may be designated by the board of 
trustees. 

(is) For the purpose of meeting disbursements for pensions, annuities, 
and other payments there may be kept an available fund not ex- 
ceeding ten per centum of the total amount in the several funds of 
the retirement system, on deposit in any bank in this State, organized under 
the laws thereof, or under the laws of the United States or in any trust 
company incorporated by any law of this State; provided, that the sum 
deposited in any one bank or trust company shall not exceed twenty-five 
per centum of the paid-up capital and surplus of said bank or trust 
company. 

(16) Except as herein provided, no trustee and no employee of the 
board shall have any interest, direct or indirect, in the gains or profits 
of any investment made by the board of trustees, nor as such directly or 
indirectly receive any pay or emolument for his services. And no trustee 
or employee of the board shall, directly or indirectly, for himself or as an 
agent in any manner use the same, except to make such current and 
necessary payments as are authorized by the board of trustees; nor 
shall any trustee or employee of the board become an endorser or 
surety or become in any manner an obliger for moneys loaned by or 
borrowed of the board of trustees. 

OTHER PROVISIONS 

State Supervision. 

256. (i) The various funds of the retirement system shall be sub- 
ject to the supervision of the State Department of Insurance. 

408 



Appendices 

Exemption from Taxation. 

(2) The riglit of a teacher to a pension, an annuity, or a retire- 
ment allowance, to the return of contributions, any benefit or right 
accrued or accruing to any person under the provisions of this article, 
and the moneys in the various funds created hereunder, are hereby 
exempt from any State or municipal tax, and shall not be subject to 
execution garnishment, attachment or any other process v^^hatsoever, 
and shall be unassignable except as in this act specifically provided. 
Protection Against Fraud. 

(3) Any person who shall knowingly make any false statement, or 
shall falsify or permit to be falsified any record or records of this 
retirement system in any attempt to defraud such system as a result 
of such act, shall be guilty of a misdemeanor, and shall be punishable 
therefor under the laws of the State of New Jersey. Should any 
change or error in records result in any employee or beneficiary re- 
ceiving from the retirement system more or less than he would have 
been entitled to receive had the records been correct, then, on the 
discovery of any such error, the board of trustees shall correct such 
error, and, so far as practicable, shall adjust the payments in such 
a manner that the actuarial equivalent of the benefit to which he was 
correctly entitled shall be paid. 

2. All acts and parts of acts inconsistent with the provisions of this 
act or any portion of the act to which this act is an amendment, which 
are inconsistent with the provisions of this act are hereby repealed. If any 
section, clause or part of this act shall be declared unconstitutional by the 
decision of any court of competent jurisdiction, such decision shall not 
invalidate or destroy the force or purpose of the remainder thereof. 

3. This act shall take effect immediately. 
Approved April 10, 1919. 

Laws of 1919, Chapter 81. An Act to amend "An act to amend an 
act entitled 'An act to establish a thorough and efficient system of free 
public schools, and to provide for the maintenance, support and 
management thereof,' approved October nineteenth, one thousand nine 
hundred and three," approved May seventh, one thousand nine hun- 
dred and seven. 

Be it enacted by the Senate and General Assembly for the State of New 
Jersey : 

I. Section two hundred and twenty-one of Article XXV of the act 
to which this act is an amendment is hereby amended to read as follows : 

221. I. Any member of the now existing Teachers' Retirement Fund 
shall be released from membership in said fund and from any obligation 
for the payment of dues or deduction from salary for the support of said 
fund, and the board or body by which he or she is employed shall cease 
to deduct the percentages as heretofore deducted from his or her salary; 
provided, such member shall, at any time after the passage of this act, 
give written notice duly witnessed declaring his or her withdrawal from 
membership in the Teachers' Retirement Fund, and waiving all his or 
her rights, benefits and privileges thereunder in triplicate, and in sub- 
stantially the following form : 

NOTICE OF WITHDRAWAL 

To the Board of Trustees of the Teachers' Retirement Fund. 

This shall serve as a notice that I hereby withdraw from membership 
in the Teachers' Retirement Fund, and that I hereby waive all my 
rights, benefits and privileges in and to said fund by virtue of my mem- 
bership in and contributions to the Teachers' Retirement Fund. 

409 



Teachers' Pension Systems in the United States 



Date Signed 

Witnessed by Address 

Address School 

One copy of such notice shall be delivered to the board of trustees of the 
Teachers' Retirement Fund, at the office of the Teachers' Retirement Fund, 
and one copy to the board of trustees of the Teachers' Pension and 
Annuity Fund, and the other copy of the board or body by which he or 
she is employed. In case such delivery is not made in person or by agent, 
it shall be deemed to have been made when said notice is mailed properly 
addressed to the party to which such dehvery should be made postpaid 
and by registered mail. Such notice shall become effective and member- 
ship in the Teachers' Retirement Fund shall cease on the first day of the 
month next following such delivery of such notice. 

II. No person appointed as a teacher in this State after the passage 
of this act shall be required to become a member of the Teachers' Retire- 
ment Fund, but such person may do so if he or she so elects. 

2. This act shall take effect immediately. 

Approved April lo, 1919. 

(f) Ohio 
An Act to provide a state-wide retirement system for teachers in. 
schools supported wholly or in part by public funds. 

Be it enacted by the General Assembly of the State of Ohio : 

Section i. That the following words and phrases as used in this act, 
unless a different meaning is plainly required by the context, shall have the 
follovv'mg meanings : 

"Retirement System" shall mean the "State Teachers' Retirement Sys- 
tem" provided for in this act. 

"Retirement Board" shall mean the board provided for in this act to 
administer said Retirement System. 

"Employer" shall mean the board of education, school district or other 
agency within the State of Ohio by which a teacher is employed or paid. 

"Teacher" shall mean any teacher or other person regularly employed 
in the public schools of the State of Ohio, who is required by law to have 
a teachers' certificate ; and any teacher in any school or college or other 
institution wholly controlled and managed, and wholly or partly supported 
by the state or any subdivision thereof, the board of trustees or other 
managing body of which shall accept the requirements and obligations of 
this act. 

"Present-teachers" shall mean any person who was a teacher, as de- 
fined by this act, before the first day of September, nineteen hundred and 
twenty; whose membership in the retirement system has been continuous; 
and, 

(a) who became a member on said date, or on the date of his first 
service as a teacher after said date and within one year after his last 
day of service previous to said first day of September, nineteen hundred 
and twenty ; or, 

(b) who was a teacher of a school or college or other institution on said 
date, or on a subsequent date within one year after his last day of service 
as such teacher previous to said first day of September, nineteen hundred 
and twenty, and who continued thereafter to be a teacher thereof until he^ 
with the teaching staff of such school or college or other institution, 
became a member of the retirement system as provided in this act; or, 

(c) who was a member of a local district pension system on said date, or 
on the date of his first eligibility to such membership after said date 

410 



Appendices 

and within one year after his last day of membership therein previous to 
said first day of September, nineteen hundred and twenty, and who 
continued thereafter to be a member until he, with the membership 
of such local district pension system, became a member of the retirement 
system. 

"New-entrant" shall mean any teacher who is a member except a present- 
teacher. 

"Prior-service" shall mean all service as a teacher, as defined by this 
act, rendered before the first day of September, nineteen hundred and 
twenty, by a present-teacher and similar service in another state credit for 
which was procured by a present-teacher as provided by this act. 

"Total-service" shall mean all service of a member of the retirement 
system since last becoming a member and, in addition thereto, all his 
prior-service computed as provided in this act. 

"Member" shall mean any person included in the membership of the 
retirement system as provided in this act. 

"Contributor" shall mean any person who has an account in the teachers' 
savings fund. 

"Beneficiary" shall mean any person in receipt of a retirement allowance 
or other benefit provided by this act. 

"Regular interest" shall mean interest at four per centum per annum, 
compounded annually. 

"Accumulated contributions" shall mean the sum of all the amounts de- 
ducted from the compensation of a member and credited to his individual 
account in the teachers' savings fund together with regular interest 
thereon. 

"Final average salary" shall mean the average annual compensation, not 
exceeding two thousand dollars, earnable as a teacher by a member during 
the ten years immediately preceding his date of retirement. 

"Annuity" shall mean payments for life derived from contributions 
made by a contributor and paid from the annuity and pension reserve 
fund as provided in this act. All annuities shall be paid in twelve equal 
monthly installments. 

"Pension" shall mean annual payments for life derived from appropria- 
tions made by an employer and paid from the employers' accumulation 
fund or the annuity and pension reserve fund as provided in this act. All 
pensions shall be paid in twelve equal monthly installments. 

"Retirement allowance" shall mean the pension plus the annuity. 

"Annuity reserve" shall mean the present value, computed upon the 
basis of such mortality tables as shall be adopted by the retirement board 
with regular interest, of all payments to be made on account of any 
annuity or benefit in lieu of any annuity, granted to a member under 
the provisions of this act. 

"Pension reserve" shall mean the present value computed upon the 
basis of such mortality tables as shall be adopted by the retirement 
board with regular interest, of all payments to be made on account 
of any pension, or benefit in lieu of any pension, granted to a member 
under the provisions of this act. 

The year for the administration of this act shall mean the school year 
and shall begin September first and end with August thirty-first next 
following. 

"Local district pension system" shall mean any school teachers' pension 
fund created in any school district of the State of Ohio in accordance with 
the laws of such state prior to the first day of September, nineteen hundred 
and twenty. 

Section 2. A state teachers* retirement system is hereby established 
for the teachers of the public schools of the State of Ohio which shall 

411 



Teachers' Pension Systems in the United States 

include the several funds created and placed under the management of a 
"Retirement Board" for the payment of retirement allowances and other 
benefits under the provisions of this act. The retirement board herein 
created shall have the right to sue and be sued, plead and be impleaded, 
contract and be contracted with and do all things necessary to carry out 
the provisions of this act and by such name all of its business shall be 
transacted, all of its funds invested, all warrants for money drawn and 
payments made, and all of its cash and securities and other property shall 
be held. 

Section 3. The general administration and the management of the 
state teachers' retirement system and the making effective the provisions 
of this act are hereby vested in the retirement board which shall have 
authority to make all necessary rules and regulations, not inconsistent with 
the provisions of this act to carry into effect the provisions thereof. 

Section 4. The retirement board shall consist of five members as 
follows: (a) the superintendent of public instruction; (b) the auditor of 
state; (c) the attorney general; and (d) two other members known as 
teacher members, who shall be members of the retirement system and 
who shall be elected by ballot by the members of the retirement system. 

Section 5. The first election of teacher members of the retirement board 
shall be conducted by and under the supervision of the superintendent of 
public instruction within sixty days after the first day of September 
next succeeding the passage of this act. At the first election each teacher 
shall be deemed to be a member of the retirement system and shall 
have the right to vote for two candidates for membership in the retire- 
ment board, provided, that any teacher in a local district pension system 
who exercises such right to vote shall be deemed to have petitioned for 
a merger with the state teachers' retirement system as provided in this act 
and his name shall be deemed to have been duly signed to any such 
petition subsequently circulated in such local district pension system. The 
candidate receiving the highest number of votes shall be elected to serve 
for a period ending on the second thirty-first of August following the 
election; the candidate receiving the second highest number of votes 
shall be elected to serve for a period ending on the thirty-first of August 
following the election. 

Section 6. Annually after the first election a member of the retire- 
ment system shall be elected by ballot to membership in the retirement 
board to serve for a term of two years beginning on the first day of 
September following the election. Vacancies occurring in the terms of 
teacher members of the board shall be filled by the remaining members 
of the board by election for the unexpired terms. Teacher members of 
the retirement board who fail to attend the meetings of the board for 
four months or longer, without being excused, shall be considered as 
having resigned and successors shall be elected for their unexpired terms. 

Section 7. All elections for members of the retirement board after 
the first election shall be held on the first Monday of May of each year 
under the direction of the retirement board. Any member of the retire- 
ment system shall be eligible for election as a member of the retirement 
board and the name of any member who shall be nominated by a petition 
signed by at least one hundred members of the retirement system shall be 
placed upon the ballots by the retirement board as a regular candidate. 
Other names of eligible candidates may at any election be substituted 
for the regular candidates by writing such names upon the ballots. The 
candidates receiving the highest number of votes for any term as member 
of the retirement board shall be elected a member of the retirement 
board for such term. 

Section 8. Until the first election shall have been held and the teacher- 

412 



Appendices 

members elected thereat duly installed, the ex officio members of the 
retirement board shall constitute an acting retirement board. 

Section 9. Each member of the retirement board created by this act 
upon appointment or election shall take an oath of office that he will 
support the constitution of the United States, the constitution of the State 
of Ohio, and that he will diligently and honestly administer the affairs 
of the said board and that he will not knowingly violate or wilfully 
permit to be violated any of the provisions of law applicable to this act. 
Such oath shall be subscribed to by the member making it, and certified 
by the officer before whom it is taken, and shall be immediately filed 
in the office of the secretary of state. 

Section 10. A majority of the members of the retirement board shall 
constitute a quorum for the transaction of any business. 

Section ii. The members of the retirement board shall serve without 
compensation, but they shall be reimbursed from the expense fund for all 
actual necessary expenses and for any loss of salary or wages they may 
suffer through serving on the retirement board. 

Section 12. The retirement board shall elect from its membership a 
chairman. 

Section 13. The treasurer of the state of Ohio shall be the custodian 
of the funds of the retirement system, and all disbursements therefrom 
shall be paid by him only upon vouchers duly authorized by the retirement 
board and bearing the signatures of said board; or, such vouchers may 
bear the fac-simile signatures of the board members printed thereon and 
the signatures of the president and secretary of said board. 

The treasurer of state shall give a separate and additional bond in 
such amount as may be fixed by the governor, but not less than the amount 
of money in all of the funds of the retirement system at the time such 
bond is fixed and with sureties to the approval of the governor, conditioned 
for the faithful performance of the duties of such treasurer as custodian 
of the funds of the retirement system provided for herein. Such bond 
shall be deposited with the secretary of state and kept in his office. 
The governor may from time to time require the treasurer of state to 
give other and additional bonds, as the funds of said retirement system in- 
crease, in such amounts and at such times as may be fixed by the 
governor which additional bonds shall be conditioned and filed as is 
provided for the original bond of the state treasurer covering the funds 
of the retirement system. 

The treasurer of state is hereby authorized and directed to deposit 
any portion of the funds of the retirement system not needed for im- 
mediate use in the same manner and subject to all the provisions of law 
with respect to the deposit of state funds by such treasurer, and all 
interest earned by such portion of the said retirement funds as may be 
deposited by the state treasurer in pursuance of authority herewith given 
shall be collected by him and placed to the credit of such fund or funds. 

Section 14. The attorney general of the state of Ohio shall be the legal 
advisor of the retirement board. 

Section 15. The retirement board shall have power to employ a 
secretary and to secure the service of such technical and administrative em- 
ployees as may be necessary for the transaction of the business of the 
retirement system. The compensation of all persons engaged by the 
retirement board and all other expenses of the board necessary for the 
proper operation of the retirement system shall be paid at such rates 
and in such amounts as the retirement board shall approve. The retire- 
ment board shall receive and act upon all applications for retirement under 
the provisions of this act and shall provide for the payment of all retire- 
ment allowances and other benefits and shall make such other necessary 



Teachers' Pension Systems in the United States 

expenditures as are required or authorized by the provisions of this 
act. 

Section i6. The members of the retirement board shall be the 
trustees of the several funds created by this act and said board shall 
have full power to invest same in bonds of the United States, the state 
of Ohio or of any county, city, village or school district of the state of 
Ohio at current market prices for such bonds ; provided that such pur- 
chase be authorized by a resolution adopted by the board ; and all such 
bonds so purchased, forthwith, shall be placed in the hands of the treasurer 
of state, who is hereby designated as custodian thereof, and it shall be 
his duty to collect the interest thereon as the same becomes due and 
payable and also the principal thereof and place the same when so col- 
lected into the retirement funds herein provided for. The treasurer of 
state shall honor and pay all vouchers drawn on the retirement funds 
for the payment of such bonds upon delivery of said bonds to him when 
there is attached to such vouchers a certified copy of such resolution 
of the board authorizing the purchase of such bonds ; and the board 
may sell any of said bonds upon like resolution, and the proceeds thereof 
shall be paid by the purchaser to the treasurer of state upon delivery 
to him of said bonds by the treasurer. 

Section 17. All interest earned upon the entire amount of money be- 
longing to said retirement system shall be divided among the various 
funds thereof proportionately, except that no interest shall be credited 
to the guarantee and expense funds herein provided for. 

Section 18. Except as herein provided, no trustee and no employee 
of the retirement board shall have any interest direct or indirect in the 
gains or profits of any investment made by the board nor as such directly 
or indirectly receive any pay or emolument for his services. And no 
trustee or employee of the said board directly or indirectly, for himself 
or as an agent or partner of others, shall borrow any of its funds or 
deposits or in any manner use the same except to make such current 
and necessary payments as are authorized by the board; nor shall any 
member or employee of said board become an endorser or surety or be- 
come in any manner an obliger for moneys loaned by or borrowed of 
the board. 

Section 19. The retirement board shall provide for the maintenance 
of an individual account with each member showing the amount of the 
member's contributions and the interest accumulations thereon. It shall 
collect and keep in convenient form such data as shall be necessary for 
the preparation of the required mortality and service table, and for the 
compilation of such other information as shall be required for the 
actuarial valuation of the assets and liabilities of the various funds cre- 
ated by this act. Upon the basis of the mortality and service experience 
of the members and beneficiaries of the system, the retirement board from 
time to time shall adopt the tables to be used for valuation purposes and 
for determining the amount of annuities to be allowed on the basis 
of the contributions of members. 

Section 20. At such times as the retirement board may deem it 
necessary and at least once within the first three years of the operation 
of this act, and once in each quinquennial period thereafter the retire- 
ment board shall have prepared by a competent actuary familiar with re- 
tirement systems, a report showing a complete valuation of the present and 
prospective assets and liabilities of the various funds created by this act 
with the exception of the guarantee fund and the expense fund. The 
actuary shall make an investigation of the mortality and service experience 
of the members of the system and shall report fully upon the condition of 
the retirement system together with such recommendations as he shall deem 

414 



Appendices 

advisable for the information of the retirement board in the proper 
operation of the retirement system. 

Section 21. The custodian shall furnish annually to the retirement 
board a sworn statement of the amount of the funds in his custody belong- 
ing to the retirement system. The records of the retirement board shall 
be open to public inspection and any member of the retirement system 
shall be furnished with a statement of the amount to the credit of his 
individual account upon written request by such member, provided that 
the retirement board shall not be required to answer more than one such 
request of a member in any one year. 

Section 22. The membership of the retirement system shall consist 
of the following: 

(a) All teachers in service on the first day of September, nineteen hun- 
dred and twenty, except teachers who shall have filed with their ern- 
ployer a statement in writing requesting exemption from membership 
or teachers who are excluded by the provisions of this act. 

(b) All teachers who became teachers or who were reappointed as 
teachers after the first day of September, nineteen hundred and twenty, 
except teachers who are excluded by the provisions of this act. 

(c) The teachers in any school or college or other institution supported 
in whole or in part by the state or any subdivision thereof and wholly 
controlled or managed by the state or any subdivision thereof shall be- 
come members on the same terms and conditions as the teachers in the 
public schools, provided that the board of trustees or other managing body 
of such school, college or other institution, if such institution is novv_ in 
existence or if in existence on said date, shall agree by formal resolution 
adopted before September first, nineteen hundred twenty-one, to accept 
all the requirements and obligations imposed by this act upon employers of 
members. Any institution which comes into existence as such thereafter 
shall have ninety days in which to accept said requirements and obliga- 
tions. A certified copy of said resolution shall be filed with the retirement 
board. When such resolution shall have been adopted and a copy 
of it filed with the retirement board, it shall not later be subject to 
rescindment or abrogation. Service in such schools, colleges or other 
institutions shall be then considered in every way the same as service in 
the public schools so far as the purposes of this act are concerned, and 

(d) All other teachers who become contributors under the provisions 
of this act. 

Section 23. Members of a local district pension system maintained 
under the laws of the state of Ohio from appropriations or contributions 
made wholly or in part by any employer and existing at the time this bill 
becomes a law are hereby excluded from membership in this retirement 
system. But should a majority of all the teachers participating in any 
such local district pension system apply for membership in the retirement 
system created by this act by a petition duly signed and verified, approved 
by their employer, and filed with the retirement board, all the teachers 
included in the membership of such local district oension system shall be- 
come members of the retirement system created by this act at such time 
within three months after the filing of such petition and the compliance 
with the other provisions of this act relative to the dissolution and dis- 
continuance of such local district pension system as the retirement board 
shall designate. 

Section 24. The retirement board, notwithstanding the foregoing pro- 
visions, may deny the right to become members to any class of teachers, 
whose compensation is only partly paid by the state, or who are not serving 
on a per annum basis, or who are on a temporary basis, or who are not re- 
quired to have a teacher's certificate, and it may also in its discretion, make 



Teachers' Pension Systems in the United States 

optional with teachers in any such class their individual entrance into 
membership. 

Section 25. The membership of any person in the retirement system 
shall cease if he withdraw his accumulated deductions or if he retire on 
a pension as provided in this act, or if he die, or if, in any four-year 
period after he last became a member, he shall render less than two years 
of service as a teacher. 

Section 26. Each teacher, upon becoming a member, shall file a 
detailed statement of all his previous service as a teacher and shall fur- 
nish such other facts as the retirement board may require for the proper 
operation of the retirement system. 

Section 27. To the extent to which it is used in determining the liability 
of any fund created by this act, the retirement board shall verify such 
statement by the best evidence it shall be able to obtain. If official records 
are not available as to the length of service, salary or other information 
required for the administration of this act, the board is hereby empowered 
to use its discretion as to the evidence to be accepted. 

Section 28. The retirement board shall credit a year of service to any 
teacher who is employed in a school district for the number of months 
the regular day school of such district were or shall be in session in said 
district within any year beginning on or about the first day of September 
and ending on or about the thirty-first day of August following, and 
shall fix and determine by appropriate rules and regulations how much 
credit shall be given for parts thereof, but in computing such service, 
or in computing final compensation, it shall credit no time during which 
a member was absent without pay, and it shall credit not more than one 
year for all service rendered in any school year. 

Section 29. Subject to the above restrictions, and to such other rules 
and regulations as the retirement board shall adopt, said board shall issue 
to each present-teacher a certificate certifying to the aggregate length of 
all his prior-service as a teacher as defined in this act. 

Section 30. Any present-teacher or new entrant, in addition to service 
as a teacher as defined in this act, may claim credit for similar service 
as a teacher in the public day schools of another state of the United 
States or of any territory or possession of the United States and such 
service shall be treated by the retirement board and included in his 
prior-service certificates as if it were service in the state of Ohio pro- 
vided the teacher shall pay into the employer's accumulation fund an 
amount equal to the additional liability assumed by such fund on account 
of the crediting of such years of service rendered outside of the state. The 
retirement board shall have final authority to determine and fix the 
amount that any teacher shall pay on account of such service outside 
of the state in the case of any present-teacher or new entrant, who 
desires to claim outside service and make such payment. 

Section 31. So long as membership continues, a prior-service certificate 
shall be final and conclusive for retirement purposes as to such service, 
unless modified by the retirement board upon application made by the 
member or upon its own initiative within one year after the date of its 
issuance or modification, or in case a mistake is found therein v/ithin one 
year of the time such mistake is so found. 

Section 32. When a present-teacher ceases to be a rnember his prior- 
service certificate shall be void and not renewable. 

Section 33. At retirement the total service credited a teacher shall 
consist of all his service as teacher since he last became a member and, 
if he has a prior-service certificate which is in full force and effect, 
all service certified on such prior-service certificate. 

Section 34. Any teacher, except a new-entrant with less than five years 

416 



Appendices 

of service, who has attained sixty years of age may retire, if a member, 
by filing with the retirement board an application for retirement. The 
filing of such application shall retire such member as of the end of the 
school year then current. At the end of the school year in which they 
become members, the retirement board shall retire all teachers who were 
over seventy years of age at the time they become members and shall 
automatically retire all other teachers who are members at the end of the 
school year in which age seventy is attained. 

Section 35. Upon superannuation retirement, a teacher shall be granted 
a retirement allowance consisting of : 

(a) An annuity having a reserve equal to the amount of the teacher's 
accumulated contributions at that time ; and 

(b) A pension of equivalent amount; and 

(c) An additional pension, if such teacher is a present-teacher, equal 
to one and one-third per centum of his average final salary multiplied 
by the number of years of service certified in his prior-service certificate 

Section 36. Any teacher who has completed thirty-six years of total 
service may retire, if a member, on a commuted superannuation allowance 
by filing with the retirement board an application for such form of 
allowance. The filing of such application shall retire such member as of 
the end of the school year then current. Upon retirement on a com- 
muted superannuation allowance, a teacher shall be granted a retirement 
allowance consisting of : 

(a) an annuity having a reserve equal to the amount of the teacher's 
accumulated contributions at that time ; and 

(b) a pension, having a reserve equal to the amount of the total 
liability of the employers' accumulation fund for the payment upon 
superannuation retirement of a pension equal to the annuity which the 
teacher's accumulations would purchase provided such teacher made no 
further payments ; and 

(c) an additional pension, if such teacher is a present-teacher, having 
a reserve equal to the amount of the total liability of the employer's 
accumulation fund for the payment of the pension allowable on super- 
annuation retirement by reason of prior-service as certified in such teacher's 
prior-service certificate. Provided, however, that no teacher retiring after 
thirty-six years of service shall receive less than twenty-five dollars 
per month as a total retirement allowance. 

Section 37. Medical examination of a member for disability shall be 
made upon the application of the employer or upon the application of the 
member or of a person acting in his behalf, stating that said member is 
physically or mentally incapacitated for the performance of duty and 
ought to be retired, provided that the said member was a teacher as de- 
fined in this act for not less than ten years preceding his retirement 
and was a member in each of such ten years which were subsequent to the 
year nineteen hundred and twenty. If such medical examination, con- 
ducted by a competent disinterested physician, or physicians, selected by the 
retirement board shows that the said member is physically or mentally 
incapacitated for the performance of duty and ought to be retired, the 
examining physician, or physicians, shall so report and the retirement 
board shall retire the said member for disability forthwith. 

Section 38. Upon disability retirement, a member shall receive a re- 
tirement allowance which shall consist of : 

(a) An annuity having a reserve equal to the amount of the teacher's 
accumulated contributions at that time ; and 

(b) A pension which, together with his annuity shall provide a retire- 
ment allowance of one and one-fifth per centum of his final average 
salary multiplied by the number of years of total service, but not less 



Teachers' Pension Systems in the United States 

than thirty per centum of said final average salary, with the exception 
that in no case shall the rate per centum of final average salary to which 
said retirement allowance amounts exceed nine-tenths of the rate per 
centum of final average salary to which he probably would have been 
entitled had retirement been deferred to the age of sixty. 

Section 39. A disability beneficiary, notwithstanding the provisions of 
this act, shall be considered on leave of absence during his first five years 
on the retired list and shall retain his membership in the retirement 
system. Once each year during said period, the retirement board shall 
require any disability beneficiary under the minimum age for superannua- 
tion retirement to undergo medical examination, said examination to be 
made at the place of residence of said beneficiary or other place mutually 
agreed upon. Upon completion of such examination by an examining 
physician, or physicians, selected by the retirement board, the examiner 
shall report and certify to the board whether said beneficiary is physically 
and mentally capable of resuming service similar to that from which he was 
retired. If the retirement board concur in a report by the examining physi- 
cian or physicians that the said disability beneficiary is capable of resuming 
service similar to that from which he was retired, the board shall so certify 
to his last employer before retirement and said employer by the first day 
of the next succeeding school year shall restore said beneficiary to his 
previous position and salary or to a position and salary similar thereto. 
Should any disability beneficiary die during such leave of absence aforesaid 
his estate shall be paid the balance which remains to his credit in the 
retirement fund at his death. Should a disability beneficiary be restored to 
active service his retirement allowance shall cease and the annuity and pen- 
sion reserves on his allowance at that time in the annuity and pension 
reserve fund shall be transferred from the annuity and pension reserve 
fund to the teachers' savings fund and the employers' accumulation fund 
respectively. Should any disability beneficiary, during his first five years 
on the retired list and while under the age of sixty, refuse to subm.it to a 
medical examination as required by this act, his retirement allowance 
shall be discontinued until his withdrawal of such refusal, and should 
such refusal continue for one year, all his rights in and to such retire- 
ment allowance shall be forfeited. After a disability beneficiary has 
been on the retired list for a period of five years he shall not be required to 
submit to further disability examination. 

Section 40. A contributor who ceases to be a teacher for any cause 
other than death or retirement, upon demand, vi^ithin ten years after such 
cessation of service, shall be paid the accumulated contributions standing 
to the credit of his indiv-idual account in the teachers' savings fund. Ten 
years after such cessation of service if no previous demand has been 
made, any accumulated contributions of a contributor shall be returned to 
him or to his legal representatives. If the contributor or his legal 
representatives can not then be found, his accumulated contributions shall 
be forfeited to the retirement system and credited to the guarantee fund. 

Section 41. Should a contributor die before retirement, his ac- 
cumulated contributions shall be paid to his estate or to such person 
as he shall have nominated by written designation duly executed and filed 
with the retirement board. If no legal representatives can be found, his 
accumulated contributions shall be forfeited to the retirement system and 
credited to the guarantee fund. 

Section 42. Until the first payment on account of any benefit is made, 
the beneficiary may elect to receive such benefit in a retirement allowance 
payable throughout life, or the beneficiary may then elect to receive the 
actuarial equivalent at that time of his annuity, his pension, or his re- 
tirement allowance, in a lesser annuity, or a lesser pension, or a lesser re- 

418 



Appendices 

tirement allowance, payable throughout life with the provision that, 

Option I— If he die before he has received in payments the present 
value of his annuity, his pension, or his retirement allowance, as it was 
at the time of his retirement, the balance shall be paid to his legal represen- 
tatives or to such person, having an insurable interest in his life, as he 
shall nominate by written designation duly acknowledged and filed with 
the retirement board. 

Option 2 — Upon his death, his annuity, his pension, or his retirement 
allowance, shall be continued throughout the life of and paid to such person 
having an insurable interest in his life, as he shall nominate by written 
designation duly acknowledged and filed with the retirement board at the 
time of his retirement. 

Option 3 — Upon his death, one-half of his annuity, his pension, or his 
retirement allowance, shall ^e continued throughout the life of such per- 
son, having an insurable interest in his life as he shall nominate by written 
designation duly acknowledged and filed with the retirement board at the 
time of his retirement. 

Option 4 — Some other benefit or benefits shall be paid to the beneficiary 
or to such other person or persons as he shall nominate provided such 
other benefit or benefits, together with such lesser annuity, or lesser pension, 
or lesser retirement allowance, shall be certified by the actuary engaged 
by the retirement board to be of equivalent actuarial value to his annuity, 
his pension or his retirement allowance, and shall be approved by the 
retirement board. 

Section 43. Each teacher who is a member of the retirement system 
shall contribute four per centum of his earnable compensation not exceed- 
ing two thousand dollars per annum, to the teachers' savings fund. Each 
employer shall deduct from the compensation of each contributor on each 
and every payroll of such contributor for each and every payroll period 
subsequent to the date upon which such contributor became a member 
an amount equal to four per centum of such contributor's earnable com- 
pensation provided that the amount of a contributor's earnable com- 
pensation in excess of two thousand dollars per annum shall not be con- 
sidered. In determining the amount earnable by a contribution in a pay- 
roll period, the retirement board and the employer may consider the rate 
of compensation payable to such contributor on the first day of the pay- 
roll period as continuing throughout such payroll period and deductions 
may be omitted from compensation for any period less than a full payroll 
period, if a teacher was not a contributor on the first day of the payroll 
period ; and to facilitate the making of deductions, the deduction required 
of any contributor may be modified in any payroll period by an amount not 
exceeding ten cents. The deductions provided herein shall be made not- 
withstanding that the minimum compensation provided for by law for any 
member shall be reduced thereby. Every member shall be deemed to con- 
sent and agree to the deductions made and provided for herein and shall 
receipt in full for his salary or compensation, and payment less said de- 
ductions shall be a full and complete discharge and acquittance of all 
claims and demands whatsoever for the services rendered by such person 
during the period covered by such payment. Each teacher shall pay 
with the first payment to the teachers' savings fund each year, and in addi- 
tion thereto a sum to be determined by the retirement board, but not to 
exceed one dollar, which amount shall be credited to the expense fund. 
Said payments for the expense fund shall be made to the retirement 
board in the same way as payments to the teachers' savings fund shall be 
made. 

Section 44. Each employer of a teacher who is a member of the re- 
tirement system shall pay to the employers' accumulation fund a certain 

419 



Teachers' Pension Systems in the United States 

per centum of the earnable compensation of each such teacher to be known 
as the "normal contribution" and a further per centum of the earnable 
compensation of each such teacher to be known as the "deficiency contribu- 
tion." The rates per centum of such contributions shall be fixed on the 
basis of the liabilities of the retirement system and shall be certified to the 
employers by the retirement board after each actuarial valuation. Until 
the first such certification, the normal contribution shall be two and eight- 
tenths per centum of the members' salaries and the deficiency contributions 
shall be two and seventy-seven hundredths per centum of the members' 
salaries. 

Section 45. On the basis of regular interest and of such mortality and 
other tables as shall be adopted by the retirement board the actuary 
engaged by the retirement board to make each valuation required by this 
act during the period over which the deficiency contribution is payable, 
immediately after making such valuation, shall determine the uniform and 
constant percentage of the earnable compensation of the average new en- 
trant, who is a contributor which, if contributed on the basis of the com- 
pensation of such contributor throughout his entire period of active 
service, would be sufficient to provide at the time of his retirement the 
total amount of his pension reserve. The rate per centum so determined 
shall be known as the "Normal contribution" rate. After the deficiency 
contribution has ceased to be payable, the normal contribution shall be the 
rate per centum of the earnable salary of all contributors obtained by de- 
ducting from the total liabilities of the employers' accumulation fund of the 
amount of the funds in hand to the credit of that fund and dividing 
the remainder by one per centum of the present value of the prospective 
future salary of all contributors as computed on the basis of the mortality 
and service tables adopted by the retirement board and on regular 
interest. The normal rate of contribution shall be determined by the 
actuary after each valuation, and shall be certified to the employers by the 
retirement board and shall continue in force until a new valuation and 
certification. 

Section 46. Immediately succeeding the first valuation, the actuary 
engaged by the retirement board shall compute the percentage of the total 
compensation of all contributors during the preceding school year which 
is equivalent to four per centum of the amount of the total pension liability 
to all contributors not dischargeable during the remainder of the active 
service of all contributors by the aforesaid normal contribution. The 
contribution derived by deductions at the rate per centum so determined 
shall be known as the "deficiency contribution." 

Section 47. Each employer shall pay annually into the employers' ac- 
cumulation fund, in such monthly or less frequent installments as the 
retirement board shall require, an amount certified by the retirement 
board which shall equal the per centum of the total compensation, earnable 
by all contributors during the preceding school year, which is the sum 
of the two rates per centum hereinbefore described and required to be 
computed, to-wit, the sum of the normal contribution rate plus the de- 
ficiency contribution rate. The aggregate of all such payments by em- 
ployers shall be sufficient, when combined with the amounts in the em- 
ployers' accummulation fund, to provide the pensions payable out of the 
fund during the year then current, and if not, the additional amount so re- 
quired shall be collected by means of an increased rate per centum of the 
deficiency contribution which shall be certified to the employers by the 
retirement board and shall continue in force for the period of one year. 

Section 48. The beforementioned deficiency contribution contributable 
by the employers shall be discontinued as soon as the accumulated reserve 
in the employers' accumulation fund shall equal the present value, as ac- 

420 



Appendices 

tuarily computed, and approved by the retirement board, of the total 
liability of such funds for the payment of pensions less the present value, 
computed on the basis of the normal contribution rate then in force, of the 
normal contributions to be received on account of teachers who are at that 
time contributors. 

Sfxtion 49. Each employer, before employing any teacher to whom this 
act may apply, shall notify such person of his duties and obligations under 
this act as a condition of his employment. 

Any such appointment or reappointment of any teacher in the public 
day schools of the state on or before the first day of September, nineteen 
hundred and twenty, or service upon indefinite tenure after that date 
shall be conditioned upon the teacher's acceptance of the provisions of this 
act as a part of the contract. 

Section 50. During September of each year, or at such other time 
as the retirement board shall approve, each employer shall certify to the 
retirement board the names of all teachers to whom this act applies. 

Section 51. Each employer shall on the first day of each calendar month, 
or at such less frequent intervals as the retirement board many approve, 
notify the retirement board of the employment of new teachers, removals, 
withdrawals and changes in salary of teachers that shall have occurred dur- 
ing the month preceding or the period since the period covered by the last 
notification. 

Section 52. Each employer shall cause to be deducted on each and 
every payroll of a contributor or each and every payroll period, subse- 
quent to the first day of September, nineteen hundred and twenty, the 
contribution payable by such contributor as provided in this act. Each 
employer shall certify to the treasurer of said employer on each and every 
payroll a statement as voucher for the amounts so deducted and for the 
amount of the normal contribution and the deficiency contribution pay- 
able by the employer as provided in this act. Each employer shall send a 
duplicate of such statement to the secretary of the retirement board. 

Section 53. The treasurer of each employer on receipt from the 
employer of the voucher for deductions from the salaries of teachers and 
for the contributions of the employer as provided in this act shall 
transmit monthly or at such times as the retirement board shall designate 
the amounts specified in such voucher to the secretary of the retirement 
board. The secretary of the retirement board after making a record of 
all such receipts shall pay them to the treasurer of the State of Ohio 
for use according to the provisions of this act. 

Section 54. Each employer shall keep such records and shall furnish 
such information and assistance to the retirement board as it may require 
in the discharge of its duties. 

Section 55. — Employers who obtain funds directly by taxation are hereby 
authorized and directed to levy annually such additional taxes as are 
required to provide the additional funds necessary to meet the financial 
requirements imposed upon them by this act, and said tax shall be 
placed before and in preference to all other items except for sinking fund 
or interest purposes. 

Section 56. The funds hereby created are the teachers' savings fund, 
the employers' accumulation fund, the annuity and pension reserve fund, 
the guarantee fund and the expense fund. 

(a) The teachers' savings fund shall be the fund in which shall be 
accumulated contributions from the compensation of contributors for the 
purchase of annuities. 

The accumulated contributions of a contributor returned to him upon 
his withdrawal, or paid to his estate or designated beneficiary in the event 
of his death as provided in this act shall be paid from the teachers' savings 

421 



Teachers' Pension Systems in the United States 

fund. Any accumulated contributions forfeited by a failure of a teacher 
or his estate to claim the same as provided in this act shall be trans- 
ferred from the teachers' savings fund to the guarantee fund. The 
accumulated contributions of a contributor shall be transferred from the 
teachers' savings fund to the annuity and pension reserve fund in the 
event of his retirement. 

(b) The employers' accumulation fund shall be the fund in which shall 
be accumulated the reserves for the payment of all pensions payable 
as provided by this act. The amounts paid by employers on account of 
their normal contributions and their deficiency contributions shall be 
credited to the employers' accumulation fund. 

Until the deficiency contribution shall have been discontinued, upon the 
retirement of a contributor, an amount equal to this annuity reserve shall be 
transferred from the employers' accumulation fund to the annuity and pen- 
sion reserve fund and a pension equal to his annuity shall be paid therefrom. 
The remainder of any pension granted to him shall be paid directly from 
the employers' accumulation fund until the pension reserve thereon shall 
have been fully accumulated and the deficiency contribution shall have 
been discontinued. Thereupon, the full reserve on all pensions thereto- 
fore payable from the employers' accumulation fund shall be transferred 
from said fund to the annuity and pension reserve fund and said pensions 
shall thereafter be paid from the annuity and pension reserve fund. Upon 
the retirement of a contributor thereafter, the full amount of his pension 
reserve shall be transferred from the employers' accumulation fund to the 
annuity and pension reserve fund. 

(c) The annuity and pension reserve fund shall be the fund from 
which shall be paid all pensions and annuities, or benefits in lieu thereof, 
on account of which reserves have been transferred from the teachers' 
savings fund or the employers' accumulation fund as provided in this act. 

When the deficiency contributions have ceased to be payable, the full 
amount of the pension reserves on the pensions then directly payable from 
the employers' accumulation fund shall be transferred from said fund to 
the annuity and pension reserve fund. The annuity and pension reserve 
fund then and thereafter shall be the fund from which shall be paid all 
annuities and all pensions, and all benefits in lieu thereof, which are payable 
as provided in this act. Upon the retirement of a contributor, then and 
thereafter, his accumulated deductions shall be transferred from the 
teachers' savings fund to the annuity and pension reserve fund, and an 
amount equal to his full pension reserve shall be transferred from the 
employers' accumulation-fund to the annuity and pension reserve fund. 

Any teacher at the time of retirement shall be permitted to deposit in the 
annuity and pension reserve fund such amount in multiples of one hundred 
dollars as such teacher shall desire and such teacher shall receive in return 
therefor an annuity having a reserve equal to the amount deposited, pro- 
vided, that in no case shall a teacher have the right to purchase an annuity, 
which together with the retirement allowance otherwise provided under 
the provisions of this act shall exceed such teacher's final average salary. 

(d) A guarantee fund is hereby created to facilitate the crediting of 
uniform interest on the amounts in the various other funds with the 
exception of the expense fund, and to provide a contingent fund out of 
which special requirements of any of the other funds may be covered. 
All income, interest and dividends derived from the deposits and invest- 
ments authorized by this act shall be paid into the guarantee fund. 

The retirement board is hereby authorized to accept gifts and be- 
quests. Any funds that may come into possession of the retirement 
system in this manner or which may be transferred from the teachers' 
savings fund by reason of lack of claimant or because of a surplus in any 

422 



Appendices 

fund created by this act or any other moneys whose disposition is not 
otherwise provided for herein shall be credited to the guarantee fund. 

The interest allowed by the retirement board to each of the funds as 
provided in this act shall be paid to such funds from the guarantee fund. 
Any deficit occurring in any fund which would be not automatically covered 
by the payment to that fund as otherwise provided by this act shall be 
met by payments from the guarantee fund to such fund. Should the 
amount in this fund in any year be insufficient to meet the amounts pay- 
able therefrom the amount of such deficiency with regular interest added 
thereto, shall be assessed by the retirement board in the succeeding years 
among the employers on the basis of the amount of the normal contribu- 
tions paid by them, and the amounts so assesed shall be payable by such 
employers in the same manner and out of the same funds as their normal 
contributions are made and shall be credited to the guarantee fund. 

(e) The expense fund shall be the fund from which shall be paid 
the expense of the administration of this act, exclusive of amounts pay- 
able as retirement allowances and as other benefits as provided in this act. 

Section 57. The retirement board shall estimate annually the amount 
required to defray such expense in the ensuing year. The retirement 
board shall apportion the amount of the expense so estimated in equal 
amounts among the contributors, provided that the amount so apportioned 
in any year shall not exceed one dollar per contributor. If the amount 
estimated to be required to meet the expenses of the retirement board is in 
excess of one dollar per contributor for the year, the amount of such 
excess shall be paid from the guarantee fund. If in the judgment of the 
retirement board, as evidenced by a resolution of that board recorded 
in its minutes, the amount in the guarantee fund exceeds the amount 
necessary to cover the ordinary requirement of that fund for a period 
of five years in the future, the board may transfer to the expense fund 
such excess amount not exceeding the entire amount required to cover the 
expenses as estimated for the year and the retirement board may then 
apportion the remaining amount required for the expense fund, if any, 
among the contributors as before mentioned. 

Section 58. The sum of ten thousand dollars is hereby appropriated 
from the moneys in the general revenue fund of the State of Ohio, 
not otherwise appropriated, for the expense of establishing, organizing and 
starting the operations of the retirement system and of establishing an 
office therefor. This sum shall be credited to the expense fund and ex- 
pended only on order of the retirement board. 

Section 59. If a local district pension system votes to merge with the 
retirement system as provided in this act, the retirement board created by 
this act shall employ an actuary to value the assets and liabilities which 
will be taken over by the retirement system hereby created in the event 
of such merger. The actuary so employed shall be an actuary also 
approved by the employer in whose district the local district pension system 
is operated, and the expense of the valuation shall be paid by such em- 
ployer. The actuary shall compute the present value of the liabilities on 
account of teachers in service in the local district pension system and on 
account of pensioners on the rolls of such local district pension system. 
He shall also compute the present value of the prospective amount to 
he received by reason of the payment of the normal contributions by the 
employer on behalf of the active teachers of such local system in the 
event of the contemplated merger. From the present value of the total 
liability for pensions on account of teachers in service in the local district 
pension system as previously determined, the actuary shall deduct the 
present value of the normal contributions. The amount remaining, together 
with the excess, if any, of the present value of all payments, necessary to 

423 



Teachers' Pension Systems in the United States. 

continue the pensions of the pensioners of the local district pension system^ 
over and above the amount of the moneys and securities of such system, 
shall be known as the "accrued liability." Provided that no teacher, a 
member of a local district pension system at the time of the passage of this 
act, shall receive a lesser total retirement allowance upon retirement after 
merger of the local system with the state system than said teacher would 
have received upon retirement under the provisions of the local system. 

Section 6o. The actuary shall then determine the amount of a de- 
ficiency contribution which payable annually without regard to the 
payroll of contributors and increasing by three per centum of itself each 
year, until the year in which the deficiency contribution payable by other 
employers who had no local pension system may be expected to be dis- 
continued, shall have a present value equal to this accrued liability. 

Section 6i. The increasing contribution so determined by the actuary 
shall be paid by the employer instead of the deficiency contribution com- 
puted as otherwise provided by this act, anything to the contrary notwith- 
standing. In the event of merger, the moneys and securities to the 
credit of the local district pension system, not exceeding an aggregate 
amount equal to the present value of the payments to be made on account 
of all pensions to the pensions on the rolls of the local district pension 
system, shall be transferred to the employers' accumulation fund and the 
pensions then payable by the local district pension system shall thereafter 
be paid from the employers' accumulation fund until the reserves on these 
pensions with the other pensions payable from the employers' accumulation 
fund shall have been accumulated and shall be transferred to the annuity 
and pension reserve fund, from which fund they shall thereafter be pay- 
able. The pensions of the active members of the local district pension 
system and of the new entrants shall thereafter be payable as are the pen- 
sions of other members of the retirement system hereby created. The 
amount of the excess of the moneys and securities of the local district 
pension system over and above the present value of the payments to be 
made on account of all pensions to the pensioners of the rolls of the 
local district pension system shall be transferred to the teachers' savings 
fund and shall be credited pro rata to the active teachers of such local 
district pension system on the basis of the amounts of their previous 
contributions to the local district pension system, provided, however, 
that in case such method of distribution shall not be found practicable 
by the retirement board, the board may use such other method of appor- 
tionment as may seem fair and equitable to such board. The amount 
so credited in any case shall be considered as a part of the teacher's 
accumulated contributions for all purposes except in the case of retire- 
ment in which it shall be considered as an amount in excess of the teacher's 
accumulated contributions and shall be used in purchasing from the 
annuity and pensions reserve fund an annuity, in addition to any other 
annuity or pension benefit otherwise provided by this act. 

After the moneys and securities of any local district pension system 
shall have been transferred to the employers' accumulation fund or to 
the teachers' savings fund as hereinbefore provided, such local district pen- 
sion system shall cease to exist. 

Section 62. The right of a person to a pension, an annuity, or retire- 
ment allowance itself, any optional benefit, any other right accrued or accru- 
ing to any person under the provisions of this act, the various funds 
created by this act and all moneys and investments and income thereof, are 
hereby exempt from any state, county, municipal or other local tax, and 
shall not be subject to execution, garnishment, attachment, the operation 
of bankruptcy or insolvency laws or any other process of law whatsoever, 
and shall be unassignable except as in this act specifically provided. 

424 



Appendices 

Section 63. Any person who shall knowingly make any false statement 
or shall falsify or permit to be falsified any record or records of this 
retirement system in any attempt to defraud such system as a result of 
such act, shall be guilty of a misdemeanor and shall upon conviction 
thereof be fined not less than ten nor more than one thousand dollars. 

(g) Vermont 

Laws of 1919, Chapter 57 — An Act to Establish the Vermont Teachers' 
Retirement System. 

It is hereby enacted by the General Assembly of the State of 
Vermont: 

Section i. Definitions. The following words and phrases as used in 
this act shall have the following meanings : 

(i) "Teacher" shall mean any teacher, principal, supervisor or 
superintendent employed in a public day school within the state. 

(2) "Public school" shall mean any day school conducted within the 
state under the authority and supervision of a duly elected board of 
school directors. 

(3) "Year" as used in this act referring to the term of school service 
of a teacher shall mean the same as "school year," as defined in t!ie 
.general laws of the state at the time when the school service in question 
was rendered, provided, however, that the retirement board may in special 
cases determine what school service shall constitute the equivalent of a 
specified period of service under this act. 

(4) "Interest," unless herein otherwise provided, shall mean com- 
pound interest at such rate as shall be determined by the retirement 
board. 

(5) Wherever the word "he" appears it shall be taken to apply 
to females as well as males. 

Section 2. Teachers' Retirement System. The Vermont teachers' re- 
tirement system, hereinafter called the retirement system, is hereby estab- 
lished, to become effective on July first nineteen hundred and nineteen. 

Section 3. Teachers Retirement Association. An association to be 
known as the Vermont teachers' retirement association, hereinafter called 
the retirement association, may be organized by and among the teachers 
in the public schools of the state. Membership in said association may be 
acquired under the following conditions: 

All teachers who shall serve in the public schools on or after July first, 
nineteen hundred and nineteen, may become members of the association, 
upon application to and approval by a majority of the retirement board 
and under such rules and regulations as it may prescribe. 

Section 4. Organization. The teachers who desire to become members 
of the retirement association shall, as soon as may be after July first, nine- 
teen hundred and nineteen, adopt such form of organization for said 
association as shall be prescribed by the commissioner of education, the 
state treasurer and the insurance commissioner; and thereafter such 
organization shall be maintained for the purposes herein contemplated, 
with such modifications thereof as may be adopted from time to time by 
the members of the association with the approval of the retirement board. 

Section 5. Teachers' Retirement Board. The administration of the 
retirement system hereby established is hereby vested in a board to be 
known as the teachers' retirement board, herein called the retirement 
board, consisting of five members, as follows: The commissioner of 
education, the state treasurer, the insurance commissioner and two mem- 
bers of the retirement association. Upon the organization of said asso- 

425 



Teachers' Pension Systems in the United States 

ciation the members thereof shall elect from among their number, in a 
manner to be approved by the commissioner of education, the state 
treasurer and the insurance commissioner two persons to serve upon the 
retirement board, one member to serve for one year and one for two 
years; and thereafter the members of the retirement association shall 
elect annually fom among their number, in a manner to be approved by the 
retirement board, one person to serve on said board for the term of two 
years. 

Until the organization of the retirement association and the election 
of two representatives therefrom to membership on the retirement 
board, the commissioner of education, the state treasurer and the 
insurance commissioner shall be empowered to perform all the duties 
of said board. 

When a vacancy occurs in the retirement board by reason of the 
death, resignation or inability to serve of one of the members chosen 
by the retirement association such vacancy shall be filled for the un- 
expired term by the election of a new member of said association, at a 
meeting duly called for that purpose. 

The members of the retirement board shall serve without compensa- 
tion, but they shall be reimbursed for all necessary expenses which 
they may sustain through their service on the board. All claims for 
such reimbursement shall be subject to the approval of the auditor of 
accounts. 

Section 6. General Duties. The retirement board shall provide 
for the payment of retirement allowances and such other expenditures as 
are prescribed by this act, and shall perform such other functions as are 
required for the execution of the provisions hereof ; and to that end said 
board shall make by-laws and regulations not inconsistent with the pro- 
visions of this act, shall employ a secretary, whose duty it shall be to 
keep a record of all its proceedings, and shall provide such other clerical 
assistance as may be necessary for the discharge of the duties prescribed 
hereunder. 

Section 7. Administrative Duties. The retirement board shall adopt 
mortality tables for the retirement system hereby created, and, except 
as herein otherwise provided, shall determine what rates of interest shall be 
established in connection with such tables or otherwise under the provisions 
hereof. Said board may modify such mortality tables or adopt others, and 
may change rates of interest once established, unless otherwise provided 
herein, but not so as to impair the vested rights hereunder of any member 
of the retirement association, unless such modifications or changes shall 
be assented to by such member. Said board shall establish and mainrain, 
under competent actuarial advice, a complete system of records and 
accounting. 

Section 8. Creation of Annuity Fund. The annuities hereinafter pro- 
vided shall be paid out of a fund to be known as the annuity fund, which 
shall be constituted as follows : 

(i) Each member of the retirement association shall pay into the 
annuity fund, under regulations to be prescribed by the retirement 
board, such percentage of his salary as may be determined by said board 
within the limits hereinafter prescribed. The rate of assessm.ent for each 
school year, which shall not be more than five per cent of each member's 
salary, shall be established by the retirement board on or before the 
1st day of April in each year, and notice thereof shall be given all 
members of the retirement association in such manner as the retirement 
board shall prescribe. Such rate of assessment shall be uniform, at any 
given time, for all members of the retirement association; provided, how- 

426 



Appendices 

ever, that no member shall in any one year pay into said fund less than 
sixteen dollars nor more than one hundred dollars. 

(2) Any member of the retirement association, who for thirty years 
shall have paid into said fund his regular assessments, as above provided, 
shall be exempt from further assessments ; but such member may there- 
after, if he so elects, continue to pay his assessments into said fund. 

(3) The annuity fund shall also consist of such amounts as may be 
appropriated from time to time by the general assembly on estimates sub- 
mitted by the retirement board, subject to approval by the board of 
control, as hereinafter provided. Such estimates shall provide for an ap- 
propriation sufficient to enable the board to credit annually to each member 
of the retirement association a sum equal to his contribution to the 
annuity fund and the additional allowance provided in section thirteen of 
this act. Provided, however, that the state shall not be called upon to 
pay into said annuity fund more than one hundred dollars in any year 
on account of the contribution of any one member of said retirement 
association ; nor shall the total amount appropriated by the state in any one 
year to carry out the provisions of this act exceed the sum of twenty-five 
thousand dollars. 

Section 9. Contributions. How Credited. The contributions made by 
the members of the retirement association to the annuity fund hereinbefore 
created, shall be credited as made to such members severally in individual 
accounts up to the time of retirement, and at the same time each member 
so contributing shall be credited individually with a like amount as the 
contribution of the state. Contributing members shall also be credited 
with the interest earned by their several contributions and by the equal 
contributions made by the state as aforesaid. 

Section 10. Retirement. Any member of the retirement association, 
who shall have served as a public school teacher for a period of thirty 
years, of which twenty years, and the last five preceding retirement, shall 
have been in this state, may retire from service in the public schools on 
or after attaining the age of sixty years, if a woman, and of sixty-five 
years, if a man, without forfeiting any of the benefits of the retirement 
system; and at any time thereafter, if incapable of rendering satisfactory 
service, such member may be so retired, with the approval of the retire- 
ment board. 

Si;cTioN II. Reinstatement of Member. Any member of the retirement 
association, who shall have withdrawn from service in the public schools 
of the state, shall, on being re-employed therein, be reinstated in the 
retirement association uponi such terms and conditions as shall be 
prescribed by the retirement board. 

Section 12. Retirement Allowances. Except as hereinafter provided. 
a member of the retirement association, who shall have retired from 
service in the public schools of the state, and who shall have complied 
with all the provisions of this act and with the rules and regulations 
of the retirement board hereby authorized, shall be entitled to receive from 
the annuity fund hereinbefore established, (i) such annuity as his con- 
tributions to said fund, with interest thereon, together with the like 
contributions made thereto by the state, and the interest thereon, will 
purchase on the basis of McClintock's table of mortality among annuitants, 
and an interest rate of three and a half per cent annum; or, (2) at his 
option, he shall be entitled to receive an annuity of less amount, as may be 
determined by the retirement board for annuitants electing such option, 
with the provision that if the annuitant dies before receiving payments 
equal to the sum of hir. assessments hereunder and the contributions equal 
thereto made by the state, as hereinbefore provided, with interest, the 
difference between the total amount of said payments and the total amount 

427 



Teachers' Pension Systems in the United States 

of such assessments and contributions, with interest, shall be paid as an 
annuity to a surviving husband, or wife, as the case may be, or to his or 
her legal representatives as such member may elect, subject to such reason- 
able rules and regulations as the retirement board may prescribe. 

Section 13. Teachers Already in Service. Any teacher already in the 
service of the state when this act takes effect, who shall become a mem- 
ber of the retirement association when forty-five years of age or older, 
shall on retiring as hereinbefore provided, be entitled to receive the allow- 
ance prescribed in the preceding section for members entering the service 
of the state as teachers after the passage of this act, and such additional 
allowance from the state as may be determined by the retirement board, 
the same to be paid as provided in the preceding section ; but his total 
annuity hereunder shall not exceed one half his average annual salary 
throughout his entire period of active service in the state. 

Section 14. Allowance in Case of Death or Disability. A member of 
the retirement association, who shall have been a teacher in the public 
schools of the state at least six years, and who shall become totally 
and permanently disabled to teach, as determined upon examination by 
physicians approved by the retirement board, shall receive an annuity based 
upon the accumulated sum of his contributions and the equal contributions 
of the state, with interest, calculated on the basis of McClintock's table 
of mortality among annuitants and three and a half per cent interest, 
with such additional annual allowance from the state as the retirement 
board, in the exercise of sound discretion, shall deem equitable, the same 
being limited by his earning capacity in other occupations, such additional 
allowance to be continued so long, and in such amount, as the retirement 
board may determine; provided, however, that in no event shall the total 
sum received annually by such member, under this section, including his 
annuity and the additional allowance above provided for, exceed half of 
his average annual salary throughout his entire period of service as de- 
termined by the retirement board. 

If such retiring member should die before receiving in the form of an 
annuity all of the accumulations up to the time of his disability from his 
own and the state's annual contributions on his account, the balance shall 
he paid to his or her legal representatives, as he or she may elect, subject 
to such rules and regulations as may be prescribed by the retirement board. 

Section 15. Allowance in Case of Resignation or Dismisal. (i) Any 
member of the retirement association withdrawing from service in the 
public schools of the state, by resignation or dismissal, before becoming 
eligible to retirement under the provisions of this act, shall be entitled 
to receive from the annuity fund all amounts contributed thereto as assess- 
ments and, if at the time of such withdrawal, such member shall have 
served in the public schools of the state six years or more, he shall be 
entitled to receive, in addition, the contributions made by the state on his 
account as hereinbefore provided. 

(2) In case of the death of such member under the circumstances above 
set forth, the several amounts to which he would be entitled, if living, shall 
he paid to a surviving husband or wife, or to the legal representatives of 
such deceased member, as may be elected, subject to the rules and regula- 
tions of the retirement board. 

(3) In the case of the death or withdrawal from service of such 
member before the completion of six years of service in the public schools 
of the state the contributions made by the state on his account, as herein- 
before provided, shall be placed in the reserve fund hereinafter established, 
for the general purposes of the retirement system. 

(4) Contributions returned as above provided shall be paid in lump 
sums or in installments as the member may elect, subject, however, to such 

428 



Appendices 

reasonable rules and regulations as may be prescribed by the retirement 
board. 

Section i6. Exemptions. That portion of the salary or wages of a 
member deducted or to be deducted under this act, the right of a member 
to an annuity or allowance hereunder, and all his rights in the funds 
of the retirement system, shall be exempt from taxation, and from the 
operation of any laws relating to bankruptcy or insolvency, and shall not 
be attached or taken upon execution or other process of any court. No 
assignment by a member of any part of such funds to which he is or may 
be entitled, or of any right to or interest in such funds, shall be valid. 
Section 17. Administration of Funds. 

(i) All funds of the retirement system shall be in the custody and 
charge of the state treasurer, who shall invest and reinvest such funds 
as are not required for current disbursements in accordance with the laws 
of the state governing the investment of the assets of savings institutions. 

(2) The state treasurer shall make such payments to the members of 
the retirement association from the annuity fund as the retirement board 
shall order to be paid in accordance with the provisions hereof. 

(3) On or before the first day of August in each year, the state 
treasurer shall file with the insurance commissioner and with the secretary 
of the retirement board a sworn statement exhibiting the financial 
condition of the retirement system on the thirtieth day of June in each 
year, and its financial transactions for the year ending on such date. 
Such statement shall be in the form prescribed by the retirement board, 
and shall be published with the report of the state treasurer. 

Section 18. Reserve Fund. A reserve fund is hereby created, to con- 
sist of gifts and receipts from sources other than those herein specified, 
returns to the state of its contributions to the annuity fund as herein- 
before provided, and balances that may accrue on account of interest, sav- 
ings or otherwise, which fund shall be maintained and used, in the 
discretion of the retirement board, for unforeseen contingencies, expenses 
of administration, or any other purpose within the scope of the retirement 
system. 

Section 19. Accrued Liabilities Fund. An accrued liabilities fund is 
hereby created, to consist of the Vermont state teachers' retirement fund, 
now in the custody of the state treasurer under the provisions of sections 
1220 to 1231, inclusive, of the General Laws, of such part of the reserve 
fund as the retirement board may from time to time transfer thereto, and 
of such other funds as may be received by the retirement board for the 
purposes contemplated in this section. Provided, however, that said 
Vermont teachers' retirement fund shall not become part of the funds of 
the retirement system as contemplated in this section except upon a vote 
to that effect of the Vermont state teachers' retirement fund association, 
duly certified to the retirement board by the president of said association. 
The accrued liabilities fund shall be drawn upon from time to time by the 
retirement board as needed to make up the contributions of the state to 
the retiring and disability allowances provided hereunder. Said funds 
shall be in all respects subject to the provisions of this act, and to the 
rules and regulations of the retirement board hereby authorized in respect 
to custody, investment, audit and disbursement. 

Section 20. Supervision of Retirement System. The retirement board 
shall cause the system hereby established to be thoroughly examined by 
a competent actuary or actuaries, once in every three years, and oftener 
if deemed necessary, and many call an actuary in consultation at any 
time; and such board is hereby empowered to change the scale of con- 
tributions required of teachers, if deemed advisable as the result of ac- 
tuarial experience hereunder; but such changes shall not be effective 

429 



Teachers' Pension Systems in the United States 

as to teachers becoming members of the retirement association before 
the same shall have been made, unless assented to by such members. 

Section 21. The accounts of the retirement board and the books and 
accounts of the state treasurer as custodian of the funds of the retirement 
system, and the cash and securities in his hands representing such funds, 
shall be examined and audited annually at the time and in the manner 
prescribed for the annual audit of the accounts of the trustees of the 
permanent school fund and the accounts of the state treasurer in con- 
nection therewith. 

Section 22. Appropriation. The sum of twenty-five thousand dollars 
per annum is hereby appropriated to carry out the provisions of this act 
for the biennial period beginning July i, 1919. 

Section 23. Changes in Rules and Regulations. The rules and regula- 
tions hereby prescribed for the administration of the retirement system 
hereby created, shall be subject to change by the retirement board whenever 
deemed to be for the best interests of the entire body of teachers in the 
service of the state. The benefits of the retirement system shall be 
enjoyed by each member of the retirement association so long as he 
meets all the requirements of this act and complies with all the rules 
and regulations of the retirement board. 

Section 24. Sections of General Laws Repealed. Sections one thou- 
sand two hundred and twenty to one thousand two hundred and thirty- 
one, inclusive, of the General Laws are hereby repealed; provided, how- 
ever, that those provisions of said sections relating to the custody and 
control of the Vermont state teachers' retirement fund referred to in 
section twenty of this act shall continue in force until the transfer of said 
fund to the retirement system as hereinbefore provided. 

Section 25. This act shall take efifect from its passage. 

Approved April 8, 1919. 



430 



APPENDIX 4 
ACTUARIAL TABLES 

The tables shown below present part of the foundation upon which 
some of the recent actuarial systems operate. They may help the reader 
to understand the elements of actuarial computations. The first three 
tables may enable him to calculate how much a certain annual contribu- 
tion will accumulate in the course of years and what annuity it will provide. 

The American Experience Tables upon which Massachusetts system 
operates is based upon the mortality experience of the population at large 
and makes no distinction between the two sexes as to mortality. The 
McClintock Experience adopted by Vermont presents the experience 
of the annuitants of the Home Life Insurance Company. The New 
York City Teachers' Experience and the New Jersey Teachers' 
Adopted Experience, which were prepared by Mr. Geo. B. Buck, ac- 
tuary, probably represent the real mortality of the teachers better 
than any other table. 

In comparing the reserves and annuities under the different tables 
it must be noted that in the American Experience and McClintock 
Experience Tables here shown interest was assumed at 3J^ per cent as the 
latter is the interest adopted by Massachusetts and Vermont, whereas the 
New York City and New Jersey tables are computed at 4 per cent, as 4 
per cent is the interest adopted by the New York City and New Jersey 
systems. 



43] 



Teachers' Pension Systems in the United States 



Table 1 

Compound Interest 

The amount accumulated by a deposit of SI paid at the beginning of each 

year, at various rates of interest after a certain number of years 



Year 


3% 


3H% 


4% 


1 


$ 1.0300 


S 1.0350 


$ 1.0400 


2 


2.0909 


2.1062 


2.1216 


3 


3.1836 


3.2149 


3.2465 


4 


4.3091 


4.3625 


4.4163 


5 


5.4684 


5.5502 


5.6330 


6 


6.6625 


6.7794 


6.8983 


7 


7.S923 


8.0517 


8.2142 


8 


9.1591 


9.3685 


9.5828 


9 


10.4639 


10.7314 


11.0061 


10 


11.8078 


12.1420 


12.4864 


11 


13.1920 


13.6020 


14.0258 


12 


14.6178 


15.1130 


15.6268 


13 


16.0863 


16.6770 


17.2919 


14 


17.5989 


18.2957 


19.0236 


15 


19.1569 


19.9710 


20.8245 


16 


20.7616 


21 . 7050 


22.6975 


17 


22.4144 


23.4997 


24.6454 


18 


24.1169 


25.3572 


26.6712 


19 


25.8704 


27.2797 


28.7781 


20 


27.6765 


29.2695 


30.9692 


21 


29.5368 


31.3289 


33.2480 


22 


31.4529 


33.4604 


35.6179 


23 


33.4265 


35.6665 


38.0826 


24 


35.4593 


37.9499 


40.6459 


25 


37.5550 


40.3131 


43.3117 


26 


39.7096 


42.7591 


46.0842 


27 


41.9309 


45.2906 


48.9676 


28 


44.2189 


47.9108 


51.9663 


29 


46.5754 


50.6227 


55.0849 


30 


49.0027 


53.4295 


58.3283 


31 


51.5028 


56.3345 


61.7015 


32 


54.0778 


59.3412 


65.2095 


33 


56.7302 


62.4532 


68.8579 


34 


59,4621 


65.6740 


72.6522 


35 


62.2759 


69.0076 


76.5983 


36 


65.1742 


72.4579 


80.7022 


37 


68.1594 


76.0289 


84.9703 


38 


71.2342 


79.7249 


89.4091 


39 


74.4013 


83.5503 


94.0255 


40 


77.6633 


87.5095 


98,8265 


41 


81.0232 


91 . 6074 


103.8196 


42 


84.4839 


95.8436 


109.0124 


43 


88.0484 


100.2383 


114.4129 


44 


91.7199 


104.7817 


120.0294 


45 


95.5015 


109.4840 


125.8706 


46 


99.3965 


114.3510 


131.9454 


47 


103.4084 


119.3883 


138.2632 


48 


107.5406 


124.6018 


144.8337 


49 


111.7969 


129.9979 


151.6671 


50 


115.1808 


135.5828 


158.7738 



432 



Appendices 



Table 2 

Annuity Values 
Amount of reserve necessary to provide an annuity of $1.00 at a certain age 



Age 



American 

Experience 

3M% Interest 

(adopted by 

Massachusetts 

System) 



New York City 

Teachers' 

Experience 

4 % Interest 



New Jersey 

Teachers' 

Adopted 

Experience 

4 % Interest 



McClintock Experience 



3yi% Interest 

(adopted by 

Vermont 

System) 



4% 
Interest 



55 




$10.23 


$10,332 






$11,915 


56 




10.05 


10.125 






11.615 


57 




9.86 


9.914 






11.312 


58 




9.66 


9.697 






11.005 


59 




9.45 


9.476 






10.696 


60 


$10.66 


9.23 


9.250 






10.384 


61 


10.29 


9.01 


9.020 






10.070 


62 


9.93 


8.77 


8.786 






9.754 


63 


9.57 


8.54 


8.549 






9.438 


64 


9.20 


8.29 


8.309 






9.121 


65 


8.84 


8.04 


8.066 


$9.C 


986 


8.804 


66 


8.49 


7.79 


7.820 


8.7 


617 


8.488 


67 


8.14 


7.54 


7.573 


8,^ 


269 


8.173 


68 


7.79 


7.28 


7.324 


8.0 


946 


7.859 


69 


7.44 


7.02 




7.7 


654 


7.548 


70 


7.10 


6.76 




7.4 


400 


7.239 



55 




$12.83 


$12,823 




$13,296 


56 




12.56 


12.537 




12.985 


57 




12.28 


12,246 




12.671 


58 




11.99 


11.950 




12,352 


59 




11.70 


11.650 




12.030 


60 


$10.66 


11.39 


11,347 


$12,2198 


11,705 


61 


10.29 


11.08 


11,040 


11,8630 


11.377 


62 


9.93 


10.76 


10,731 


11,5045 


11,046 


63 


9.57 


10.43 


10,419 


11.1450 


10,714 


64 


9.20 


10.10 


10.105 


10,7850 


10,381 


65 


8.84 


9.76 


9,789 


10,4245 


10,046 


66 


8.49 


9,42 


9,472 


10,0647 


9,711 


67 


8.14 


9.08 


9,155 


9,7060 


9,376 


68 


7.79 


8,73 


8,838 


9,3489 


9,042 


69 


7.44 


8.39 




8,9943 


8,709 


70 


7.10 


8,04 




8,6424 


8,378 



433 



Teachers' Pension Systems in the United States 



Table 3 

Annuities Purchased by Accumulated Contributions of Certain 

Amounts at Certain Ages According to the New Jersey 

Teachers' Adopted Experience and on the Basis 

OF Interest at 4 Per cent 





Accumulated Contributions of 


Age 


$100 


$150 1 $200 


$250 


1 $300 


1 $350 1 $400 


1 $450 


$500 


55 


$9.68 


$14.52 


$19.36 


$24.20 


lEN 
$29.04 


$33.88 


$38.72 


$43.56 


$48.40 


56 


9.88 


14.82 


19.76 


24.70 


29.64 


34.58 


39.52 


44.46 


49.40 


57 


10.08 


15.12 


20.16 


25.20 


30.24 


35.28 


40.32 


45.36 


50.40 


58 


10.32 


15.48 


20.64 


25.80 


30.96 


36.12 


41.28 


46.44 


51.60 


59 


10.56 


15.84 


21.12 


26.40 


31.68 


36.96 


42.24 


47.52 


52.80 


60 


10.82 


16.23 


21.64 


27.05 


32.46 


37.87 


43.28 


48.69 


54.10 


61 


11.08 


16.62 


22.16 


27.70 


33.24 


38.78 


44.32 


49.86 


55.40 


62 


11.38 


17.07 


22.76 


28.45 


34.14 


39.83 


45.52 


51.21 


56.90 


63 


11.70 


17.55 


23.40 


29.25 


35.10 


40.95 


46.80 


52.65 


58.50 


64 


12.04 


18.06 


24.08 


30.10 


36.12 


42.14 


48.16 


54.18 


60.20 


65 


12.40 


18.60 


24.80 


31.00 


37.20 


43.40 


49.60 


55.80 


62.00 


66 


12.78 


19.17 


25.56 


31.95 


38.34 


44.73 


51.12 


57.51 


63.90 


67 


13.20 


19.80 


26.40 


33.00 


39.60 


46.20 


52.80 


59.40 


66.00 


68 


13.66 


20.49 


27.32 


34.15 


40.98 


47.81 


54.64 


61.47 


68.30 


69 


14.14 


21.21 


28.28 


35.35 


42.42 


49.49 


56.56 


63.63 


70.70 


70 


14.66 


21.99 


29.32 


36.65 


43.98 


51.31 


58.64 


65.97 


73.30 


WOMEN 


55 


$7.80 


$11.70 


$15.60 


$19.50 


$23.40 


$27.30 


$31.20 


$35.10 


$39.00 


56 


7.98 


11.97 


15.96 


19.95 


23.94 


27.93 


31.92 


35.91 


39.90 


57 


8.16 


12.24 


16.32 


20.40 


24.48 


28.56 


32.64 


36.72 


40.80 


58 


8.36 


12.54 


16.72 


20.90 


25.08 


29.26 


33.44 


37.62 


41.80 


59 


8.58 


12.87 


17.16 


21.45 


25.74 


30.03 


34.32 


38.61 


42.90 


60 


8.82 


13.23 


17.64 


22.05 


26.46 


30.87 


35.28 


39.69 


44.10 


61 


9.06 


13.59 


18.12 


22.65 


27.18 


31.71 


36.24 


40.77 


45.30 


62 


9.32 


13.98 


18.64 


23.30 


27.96 


32.62 


37.28 


41.94 


46.60 


63 


9.60 


14.40 


19.20 


24.00 


28.80 


33.60 


38.40 


43.20 


48.00 


64 


9.90 


14.85 


19.80 


24.75 


29.70 


34.65 


39.60 


44.55 


49.50 


65 


10.22 


15.33 


20.44 


25.55 


30.66 


35.77 


40.88 


45.99 


51.10 


66 


10..56 


15.84 


21.12 


26.40 


31.68 


36.96 


42.24 


47.52 


52.80 


67 


10.92 


16.38 


21.84 


27.30 


32.76 


38.22 


43.68 


49.14 


54.60 


68 


11.32 


16.98 


22.64 


28.30 


33.96 


39.62 


45.28 


50.94 


56.60 


69 


11.74 


17.61 


23.48 


29.35 


35.22 


41.09 


46.96 


52.83 


58.70 


70 


12.18 


18.27 


24.36 


30.45 


36.54 


42.63 


48.72 


54.81 


60.90 



434 



Appendices 



Table 3— (Continued) 

Annuities Purchased by Accumulated Contributions of Certain 

Amounts at Certain Ages According to the New Jersey 

Teachers' Adopted Experience and on the Basis 

OF Interest at 4 Per Cent 



Accumulated Contributions of 



Age 



I $650 I 



$750 



$800 



I $900 I 



MEN 



55 


$53.24 


$58.08 


56 


54.34 


59.28 


57 


55.44 


60.48 


58 


56.76 


61.92 


59 


58.08 


63.36 


60 


59.51 


64.92 


61 


60.94 


66.48 


62 


62.59 


68.28 


63 


64.35 


70.20 


64 


66.22 


72.24 


65 


68.20 


74.40 


66 


70.29 


76.68 


67 


72.60 


79.20 


68 


75.13 


81.96 


69 


77.77 


84.84 


70 


80.63 


87.96 



$62.92 
64.22 
65.52 
67.08 
68.64 
70.33 
72.02 
73.97 
76.05 
78.26 
80.60 
83.07 
85.80 
88.79 
91.91 
95.29 



$67.76 
69.16 
70.56 
72.24 
73.92 
75.74 
77.56 
79.66 
81.90 
84.28 
86.80 
89.46 
92.40 
95.62 
98.98 

102.62 



$72.60 
74.10 
75.60 
77.40 
79.20 
81.15 
83.10 
85.35 
87.75 
90.30 
93.00 
95.85 
99.00 
102.45 
106.05 
109.95 



$77.44 

79.04 

80.64 

82.56 

84.48 

86.56 

88.64 

91.04 

93.60 

96.32 

99.20 

102.24 

105.60 

109.28 

113.12 

117.28 



$82.28 

83.98 

85.68 

87.72 

89.76 

91.97 

94.18 

96.73 

99.45 

102.34 

105.40 

108.63 

112.20 

116.11 

120.19 

124.61 



$87.12 

88.92 

90.72 

92.88 

95.04 

97.38 

99.72 

102.42 

105.30 

108.36 

111.60 

115.02 

118.80 

122.94 

127.26 

131.94 



$91.96 
93.86 
95.76 
98.04 
100.32 
102.79 
105.26 
108.11 
111.15 
114.38 
117.80 
121.41 
125.40 
129.77 
134.33 
139.27 



55 


$42.90 


$46.80 


$50.70 


$54.60 


$58.50 


$62.40 


$66.30 


$70.20 


$74.10 


56 


43.89 


47.88 


51.87 


55.86 


59.85 


63.84 


67.83 


71.82 


75.81 


57 


44.88 


48.96 


53.04 


57.12 


61.20 


65.28 


69.36 


73.44 


77.52 


58 


45.98 


50.16 


54.34 


58.52 


62.70 


66.88 


71.06 


75.24 


79.24 


59 


47.19 


51.48 


55.77 


60.06 


64.35 


68.64 


72.93 


77.22 


81.51 


60 


48.51 


52.92 


57.33 


61.74 


66.15 


70.56 


74.97 


79.38 


83.79 


61 


49.83 


54.36 


58.89 


63.42 


67.95 


72.48 


77.01 


81.54 


86.07 


62 


51.26 


55.92 


60.58 


65.24 


69.90 


74.56 


79.22 


83.88 


88.54 


63 


52.80 


57.60 


62.40 


67.20 


72.00 


76.80 


81.60 


86.40 


91.20 


64 


54.45 


59.40 


64.35 


69.30 


74.25 


79.20 


84.15 


89.10 


94.05 


65 


56.21 


61.32 


66.43 


71.54 


76.65 


81.76 


86.87 


91.98 


97.09 


66 


58.08 


63.36 


68.64 


73.92 


79.20 


84.48 


89.76 


95.04 


100.32 


67 


60.06 


65.52 


70.98 


76.44 


81.90 


87.36 


92.82 


98.28 


103.74 


68 


62.26 


67.92 


73.58 


79.24 


84.90 


90.56 


96.22 


101.88 


107.54 


69 


64.57 


70.44 


76.31 


82.18 


88.05 


93.92 


99.79 


105.66 


111.53 


70 


66.99 


73.08 


79.17 


85.26 


91.35 


97.44 


103.53 


109.62 


115.71 



435 



Teachers' Pension Systems in the United States 



Table 4 

Expectation of Life 

(Number of years persons of certain age would on the average live thereafter) 



American Experience 
(adopted by Massa- 
chusetts System) 



New York City 
Teachers' 
Experience 



McChntock 
Exp)erience 



55 


17.40 


14.76 


17.79 


56 


16.72 


14.37 


17.14 


57 


16.05 


13.96 


16.50 


58 


15.39 


13.55 


15.88 


59 


14.74 


13.13 


15.26 


60 


14.10 


12.70 


14.65 


61 


13.47 


12.28 


14.05 


62 


12.86 


11.84 


13.46 


63 


12.26 


11.41 


12.88 


64 


11.67 


10.98 


12.31 


65 


11.10 


10.55 


11.76 


66 


10.54 


10.12 


11.22 


67 


10.00 


9.70 


10.69 


68 


9.47 


9.28 


10.17 


69 


8.97 


8.86 


9.67 


70 


8.48 


8.45 


9.18 



55 


17.40 


19.78 


20.77 


56 


16.72 


19.13 


20.04 


57 


16.05 


18.49 


19.32 


58 


15.39 


17.84 


18.61 


59 


14.74 


17.20 


17.91 


60 


14.10 


16.55 


17.22 


61 


13.47 


15.91 


16.54 


62 


12.86 


15.27 


15.87 


63 


12.26 


14.64 


15.22 


64 


11.67 


14.01 


14.57 


65 


11.10 


13.38 


13.94 


66 


10.54 


12.77 


13.33 


67 


10.00 


12.16 


12.72 


68 


9.47 


11.57 


12.14 


69 


8.97 


10.99 


11.56 


70 


8.48 


10.43 


11.00 



436 



Appendices 

Table 5 
Rate of Mortality 



Age 



American 

Experience 

(adopted in the 

Massachusetts 

System) 



New York City 
Teachers' 
Experience 



New Jersey 

Teachers' Adopted 

Experience 



McClintock 

Experience 

(adopted by the 

Vermont 

System) 



MEN ANNUITANTS 



55 


.0186 


.0407 


.0377 


.0201 


56 


.0199 


.0411 


.0387 


.0213 


57 


.0213 


.0418 


.0399 


.0227 


58 


.0229 


.0426 


.0412 


.0241 


59 


.0247 


.0436 


.0426 


.0258 


60 


.0267 


.0448 


.0441 


.0275 


61 


.0289 


.0460 


.0458 


.0294 


62 


.0313 


,0476 


.0477 


.0315 


63 


.0339 


.0494 


.0497 


.0338 


64 


.0369 


.0516 


.0519 


.0364 


65 


.0401 


.0538 


.0543 


.0391 


66 


.0437 


.0566 


.0569 


.0421 


67 


.0476 


.0593 


.0599 


.0454 


68 


.0520 


.0626 


.0630 


.0490 


69 


.0568 


.0660 


.0665 


.0529 


70 


.0620 


.0698 


.0702 


.0572 



WOMEN ANNUITANTS 



55 


.0186 


.0181 


.0169 


.0132 


56 


.0199 


.0187 


.0178 


.0141 


57 


.0213 


.0194 


.0188 


.0151 


58 


.0229 


.0201 


.0199 


.0163 


59 


.0247 


.0209 


.0212 


.0175 


60 


.0267 


.0218 


.0225 


.0188 


61 


.0289 


.0229 


.0239 


.0203 


62 


.0313 


.0240 


.0255 


.0219 


63 


.0339 


.0255 


.0273 


.0237 


64 


.0369 


.0271 


.0292 


.0256 


65 


.0401 


.0290 


.0313 


.0277 


66 


.0437 


.0312 


.0335 


.0300 


67 


.0476 


.0337 


.0361 


.0326 


68 


.0520 


.0366 


.0388 


.0353 


69 


.0568 


.0399 


.0418 


.0384 


70 


.0620 


.0436 


.0450 


.0417 



437 



Teachers' Pension Systems in the United States 



Table 6 

New Jersey Teachers' Adopted Active Service Experience 

Showing how many from an initial number of 100,000 teachers entering 

the service at the age of 18 would withdraw through resignation or dismissal, 

become disabled or die each year, and how their salaries would advance on 

the average each year. 

MEN 



Age 


Living Withd 


rawing 


Disabled 


Dead 


Salary Scale 


18 


100,000 2,C 


80 


50 


240 


530 


19 


97,630 2,] 


48 


49 


244 


615 


20 


95,189 2,3 


61 


48 


247 


694 


21 


92,533 2,1 


78 


46 


259 


772 


22 


89,850 2,2 


63 


45 


261 


849 


23 


87,181 2,2 


10 


43 


262 


920 


24 


84,566 2,2 


24 


42 


271 


990 


25 


82,029 2,1 


14 


41 


273 


1,060 


26 


79,601 l.c 


94 


39 


275 


1,130 


27 


77,293 1,^ 


61 


41 


278 


1,200 


28 


75,113 1,7 


12 


43 


281 


1.270 


29 


73,077 1,£ 


72 


44 


284 


1,330 


30 


71,177 1,4 


42 


45 


285 


1,390 


31 


69,405 1,2 


07 


46 


285 


1,450 


32 


67,767 1,1 


70 


47 


281 


1.510 


33 


66,269 1,C 


57 


48 


280 


1,560 


34 


64,884 c 


52 


49 


277 


1,605 


35 


63,606 8 


59 


50 


274 


1,650 


36 


62,423 7 


58 


51 


271 


1,695 


37 


61,343 6 


72 


52 


270 


1.735 


38 


60,349 £ 


82 


53 


270 


1,775 


39 


59,444 £ 


08 


54 


270 


1,812 


40 


58,612 4 


35 


58 


269 


1,845 


41 


57,850 2 


66 


59 


269 


1,875 


42 


57,156 2 


09 


62 


269 


1,905 


43 


56,516 2 


54 


68 


271 


1,935 


44 


55,923 2 


13 


78 


274 


1.965 


45 


55,358 1 


77 


83 


277 


1,990 


46 


54,821 1 


48 


93 


285 


2,015 


47 


54.295 1 


19 


98 


288 


2,040 


48 


53,790 


97 


107 


296 


2,065 


49 


53,290 


80 


117 


304 


2,085 


50 


52,789 


58 


132 


317 


2,105 


51 


52,282 


42 


147 


324 


2,125 


52 


51,769 


26 


160 


336 


2,145 


53 


51,247 


15 


179 


354 


2,165 


54 


50,699 




198 


370 


2.180 


55 


50,131 




221 


391 


2,195 


56 


49,519 




243 


411 


2,205 


57 


48,865 




274 


435 


2,215 


58 


48,156 




304 


462 


2,225 


59 


47.390 




341 


493 


2,235 


60 


46,556 




382 


521 


2,245 


61 


45.653 




438 


549 


2.2.50 


62 


44.666 




491 


581 


2,255 



438 



Appendices 







Table 6— (Continued) 










WOMEN 






Age 


Living 


Withdrawing 


Disabled 


Dead 


Salary Scale 


18 


100,000 


260 


50 


110 


513 


19 


99.580 


628 


50 


119 


528 


20 


98,783 


1.216 


49 


128 


543 


21 


97,390 


2,084 


49 


136 


566 


22 


95,121 


3,025 


48 


152 


592 


23 


91,896 


5,182 


47 


165 


622 


24 


86,502 


6,233 


47 


173 


659 


25 


80,049 


6,086 


46 


184 


699 


26 


73,733 


5,678 


44 


184 


740 


27 


67,827 


5,098 


44 


190 


780 


28 


62,495 


4,481 


44 


187 


815 


29 


57.783 


3,862 


44 


185 


845 


30 


53,692 


3,302 


43 


177 


870 


31 


50,170 


2,749 


40 


171 


890 


32 


47,210 


2,224 


42 


165 


910 


33 


44,779 


1.760 


45 


161 


930 


34 


42,813 


1,364 


45 


154 


950 


35 


41.250 


1,081 


45 


149 


970 


36 


39,975 


863 


48 


148 


990 


37 


38,916 


688 


51 


152 


1,000 


38 


38,025 


605 


61 


152 


1,010 


39 


37,207 


495 


108 


156 


1,020 


40 


36,448 


405 


164 


160 


1,030 


41 


35,719 


321 


229 


164 


1,040 


42 


35,005 


256 


308 


168 


1,050 


43 


34,273 


189 


353 


171 


1,055 


44 


33,560 


144 


369 


178 


1,060 


45 


32,869 


112 


371 


184 


1,065 


46 


32,202 


90 


367 


190 


1.070 


47 


31.555 


72 


360 


196 


1,080 


48 


30,927 


59 


352 


204 


1.085 


49 


30.312 


54 


346 


212 


1,090 


50 


29,700 


47 


339 


223 


1.095 


51 


29,091 


43 


332 


233 


1.100 


52 


28.483 


40 


325 


242 


1,110 


53 


27,876 


36 


318 


254 


1,115 


54 


27,268 


35 


311 


265 


1.120 


55 


26,657 


29 


304 


277 


1.130 


56 


26.047 


26 


297 


292 


1.140 


57 


25,432 


23 


290 


305 


1.145 


58 


24.814 


22 


283 


320 


1,150 


59 


24,189 


19 


276 


336 


1.160 


60 


23,558 


14 


269 


353 


1.165 


61 


22.922 


11 


262 


371 


1,175 


62 


22.278 


9 


254 


390 


1,180 



439 



Teachers' Pension Systems in the United States 



Table 7 

New Jersey Teachers' Adopted Retirement Experience 

Number of teachers among those eUgible to retirement who would die or 

retire during the year and the number among them who would be 

Uving at the beginning of the next year 



Age 



Living 



Dead 



Retirements 



60 


52,295 


593 


3,906 


61 


47,796 


642 


3,828 


62 


43,326 


673 


3,744 


63 


38,909 


700 


3,623 


64 


34,586 


719 


3,462 


65 


30.405 


711 


3,299 


66 


26,395 


677 


3,141 


67 


22,577 


643 


3,003 


68 


18,931 


602 


3,114 


69 


15.215 


514 


3,652 


70 


11,049 


398 


10,651 



60 


24,270 


364 


3,174 


61 


20,732 


335 


2,944 


62 


17,453 


305 


2,740 


63 


14,403 


272 


2,550 


64 


11,586 


237 


2.317 


65 


9,032 


200 


2,068 


66 


6,764 


162 


1,826 


67 


4,776 


124 


1,567 


68 


3,085 


87 


1,333 


69 


1,665 


51 


1.091 


70 


523 


17 


505 



440 



APPENDIX 5 

BIBLIOGRAPHY 
teachers' pension systems in the united state? 

Contents 

items 

Bibliographies 1-4 

Discussions of pension principles 5-56 

General descriptions of pension systems in the United 

States 57-75 

Note. — References to laws, reports and descriptive accounts of indi- 
vidual systems are listed in Appendix 2. 

BIBLIOGRAPHIES 

Note. — Many of the references on pensions given in the Bibliographies 
listed below have been incorporated in the present one. Publications of 
special importance are indicated by an asterisk. 

I' Nelson, C. A. comp. Bibliography of teachers' salaries 
and pensions. Educational review, Jan., 1907, v. 33: 

24-35- 

[A list containing 27 references on teachers' pensions 

together with an extended reference list on teachers' 

salaries.] 

2 Prosser, C. A. Bibliography (In his The teacher and 

old age. Boston, 1913. p. 121-34). 

[A list of 48 references on teachers' pensions, social 

insurance and the economic condition of the teaching 

profession.] 

3 U, S. Bureau of education. Library. List of references 

on teachers' pensions. June 19 14. 7 p. 
[Contains 51 references on U. S. pensions, 21 refer- 
ences on college professors' pensions and 35 references 
on foreign pensions.] 

4 Library of Congress. Divsion of bibliography. 

Select list of references on teachers' pensions. 6 numb. 
1 (typewritten). 

[Contains 60 references on teachers' pensions.] 
441 



Teachers' Pension Systems in the United States 



DISCUSSION OF pension PRINCIPLES 

5 Allen, Elizabeth A. Birth of the teachers' pension move- 

ment in the United States. Address before the Con- 
necticut teachers' association. (In Connecticut. Board 
of education. Report. Hartford, 1903. p. 291-303. 
Pub. doc. no. 8.) 

[Contains a history of the New Jersey retirement 
fund; discussion of purposes of pensions; objections 
of old and young teachers ; fund not a charity ; appeal 
to the Connecticut teachers.] 

6 Teachers' pensions — the story of a woman's cam- 
paign. Review of reviews (N. Y.) June, 1897, v. 15: 
700-11. 

[Describes the campaign which resulted in the estab- 
lishment of the New Jersey teachers' retirement fund; 
surveys the existing pension funds in the United States ; 
presents a comparative table of annuity and aid asso- 
ciations and retirement funds in the United States.] 

7 Ames, Charles L. Pensions for public school teachers 

[Hartford ? 1912] 16 p. 

[Address before the Connecticut Women's council of 

education at Hartford, May 4, 1912.] 

8 Association of American universities. The best means 

of introducing the pension system into American uni- 
versities. Discussion. (In its Journal of proceedings 
and addresses of eighth annual conference, 1907, p. 
64-71-) 

9 Best, Lyman A. Teachers' retirement fund. Address 

given at Washington, January 16, 1909, before the 
College women's club. [Washington, Govt, print, off., 
1910] 9 p. ([U. S.] 6ist Cong., 2d sess. Senate. 
Doc. 541.) 

[Contains a discussion of the purposes of teachers* 
pensions and a history of the New York City Teachers* 
retirement fund.] 
10 Bradford, Mary D. Teachers' pensions and insurance. 
Journal of education, May 11, 1905, v. 61; 512-13. 
[Describes the origin and development of pension and 
insurance movement among the teachers in the United 
States.] 

442 



Appendices 

11 Carnegie foundation for the advancement of teaching. 

Annual reports. [Articles on pensions.] 

I, 1906, p. 33-36. (Consideration of general policy. 

What is the value of a pension system? right, 

not charity.) 

III, 1908, p. 50-51. (Cost of maintaining a retire- 

ment allowance system.) 

IV, 1909, p. 57-80. (The working of the rules for 

retirement ; why college teachers retire ; age and 
service; obHgations in life insurance.) 

VI, 191 1, p. 22-23. (The moral influence of a pension 

system; favors contributory systems; obliga- 
tions of colleges.) 

VII, 1912, p. 59-87. (Contributory and non-contribu- 

tory pension systems. Subsistence and sti- 
pendiary pensions. A feasible pension system 
— six years of experience.) 

12 * A comprehensive plan of insurance and annuities 

for college teachers, by H. S. Pritchett, 1916. 67 p. 
(Its Bulletin no. 9.) 

Contents: Pensions and annuities. The origin and 
social philosophy of pension systems. Justification 
for college teachers. Life hazards. Responsibility. 
Functions and possibilities of life insurance. Are pen- 
sions wages. Accrued liabilities. Risk of disability. 
The teachers' cooperation. The desires of teachers. 

12a * Pensions for public school teachers. By Clyde 

Furst and I. L. Kandel. Bulletin no. 12, 1918. 85 p. 
Contents : The social philosophy of pensions. Funda- 
mental principles, present status. A system sug- 
gested for Vermont. Tabular statement. Summary. 
Brief bibliography. 

13 Cattell, J. McKeen. The Carnegie foundation for the 

advancement of teaching. Science, April 2, 1909, 
n.s. V. 29: 532-9. 

[Writer objects to the age condition and to the cen- 
tralized fund; advocates disability and widows' pen- 
sions; predicts insufficiency of income.] 

14 Clark. John E. Shall teachers be pensioned? (In 

National education association. Journal of proceed- 
ings and addresses, 1896. p. 988-96.) 

443 



Teachers' Pension Systems in the United States 

[Urges teachers to establish retirement funds and 
take part in the movementi; states examples of foreign 
pension systems.] 

15 Federation of teachers' associations, city of New York. 

The A. B.C. of teachers' pensions. [Memorandum 
submitted to the Senate committee of cities in favor 
of the Lock wood Ellenbogen bill] 19 16. 20 p, 
[Contains a discussion of the compulsory feature; 
contributions; objections to flat pensions; contributions 
of younger teachers not to be used for pensions of 
older teachers.] 

16 Gray, Ernest. Teachers' pensions. Contemporary re- 

view, March, 1894. v. 65; 453-6. 

[Defends the new pension system in England; state 

system better than local; reply to W. A. Hunter's 

article.] 

17 "Great Britain. Departmental committee on the super- 

annuation of teachers. Report of the Committee on 
the 2nd reference. London, 19 14. 42 p. Parlia- 
mentary Doc. 1914, V. 25. Cd. 7365. 
Contents : Conditions to which a system ought to con- 
form, p. 16; main recommendations, p. 19-22; notes of 
dissent by Lord Farrer favoring a minimum subsist- 
ence pension and by Mr. H. Fitzherbert Wright, M. P. 
favoring the Scottish teachers' pension fund plan, 
p. 39-42. _ 

18 * Parliament. House of commons. Select com- 

mittee on school hoard for London {superannuation) 
hill. Report, together with proceedings of the Com- 
mittee, minutes of evidence and appendices. London, 
1 89 1. 167 p. (Parliamentary doc. 1890-91, v. 17.) 
[P. VII-XI contain criticism of various pension pro- 
visions; p. 77-102, testimony of actuary Sutton re 
financial soundness of pension system.] 

19 * Select committee on the elementary 

education {teachers' superannuation) bill. Report, 
proceedings of the Committee, minutes of evidence 
and appendices. London, 1892. 142 p. (Parli- 
mentary doc. 1892, v. 12). 

[Of marked importance in considering pension princi- 
ples are pages i to XXVII which contain the con- 

444 



Appendices 

elusions of the commission and a summary of testi- 
mony. ] 

20 Grote, Koll. Ein Soziales Pensionssystem. Padago- 

gische Zeitung, May 29, 1913, v. 42: 415-17. 
[Discussion of the question of married teachers receiv- 
ing pensions different in amount from the unmarried.] 

21 Gunther, A. Staatshilfe and Selbsthilfe in der hinter- 

bhebenenversorgung der d^utschen lehret. In 
Padagogische Zeitung, Nov. 24 and Dec. i, 1910, v. 
39: 1 109-13; 1133-37. 

I* . ,- TDiscusses, from a social point of view, the basic prin- 

' ciples of widows' pensions.] 

22 Harris, W. T. Shall teachers be pensioned? A sympo- 

sium. Journal of education, April 2, 1891, v. 33: 
211-14. 

23 Hendrick, Burton J. "The superannuated man." Labor 

pensions and the Carnegie Foundation. McClure's 
magazine, December, 1908, v. 32: 115-27. 

24 Hunter, W. A. Superannuation of elementary teachers. 

Contemporary review, Jan. 1894, v. 65 : 84-95. 
the arguments in favor of teachers pensions; annuities 
should be smaller; local authorities, not state, should 
pay pensions.] 

25 *Hutcheson, Wm. A. Report by actuary upon the con- 

dition of the New York public school teachers' retire- 
ment fund. (In New York (City) Board of Educa- 
tion. Sixth annual report of the secretary of the 
Board of retirement. 1913). 

Reprinted by the Globe in a separate pamphlet entitled 
"The Teachers' pension law." Oct. i, 19 13. 40 p. 
[Describes principles underlying actuarial scheme, 
actuarial methods of calculating contribution and con- 
structing mortality tables.] 

26 Jastrow, Joseph. Advancement of teaching. North 

American review, October, 1907, v. 186: 213-24. 
[Exclusion of state universities from the benefits of 
the Carnegie foundation.] 

27 Carnegie foundation and its service pensions. 

Science, March 11, 1910, n.s. v. 31: 370-6. 

28 Keyes, Charles H. Teachers' pensions. (In National 

445 



Teachers' Pension Systems in the United States 

educational association of the United States. Journal 
of proceedings and addresses, 1907, p. 103-8.) 
[Discusses five reasons why pensions should be pro- 
vided for teachers.] 

29 Krueger, H. Pensioning of teachers. Journal of educa- 

tion (Boston) March 2, 1905, v. 61 : 230. 

[A brief address reviewing pension systems in the 

United States.] 

30 Lovejoy, Arthur O. The metamorphosis of the Carnegie 

foundation. Science, April 11, 1913, n.s. v. 37: 

546-52. 

[Criticizes the Carnegie foundation's pension t ->lic}''" 

31 Macnamara, T. J. The superannuation of state ?cho ' 

teachers. Westminster review, June, 1893, v. 139. 

623-35- 

[Contains a history of teachers' pensions in England; 
criticizes the new system because of absence of bene- 
fits for those who die.] 

32 Manley, Edward. Compulsory insurance for teachers. 

Educational review, Feb., 1902, v. 23: 152-7. 
[Writer objects to compulsory insurance and deduc- 
tions from salary; condemns annuities on the ground 
that they are secured at the expense of those who re- 
sign or die.] 

33 Massachusetts. Board of education. Special report on 

teachers' retirement allowances [Boston] 191 3. 48 p. 
[House Doc. 1913, no. 1926.] 

[Discussion in first eleven pages of the essential prin- 
ciples of a sound pension system.] 

34 * Commission on old age pensions, annuities and 

insurance. Report. Boston, 1910. 409 p. (House 
Doc. no. 1400.) 

[Pages 77-79 and Chapters V, VIH and IX contain a 
discussion of old-age pension principles; origin of the 
problem; contributory vs. non-contributory pensions; 
voluntary vs. compulsory insurance; universal vs. par- 
tial schemes; relation to wages and poor relief.] 

35 * Commission on pensions. Report. Boston, 19 14. 

345 p. (House Doc. no. 2450.) 

[Chapters H and V contain a discussion of the pension 
problem ; the m.erits of assisted insurance and com- 
pulsory savings vs. gratuities and free pensions.] 
446 



Appendices 

36 *Meriam, Lewis. Principles governing the retirement 
of public employees. New York, D. Appleton and 
company, 19 18. 476 p. (Institute for government 
research. Principles of administration.) 
["In this book the author deals with the whole sub- 
ject of public policy governing the establishment of 
pension systems. The social, economic, administrative 
and financial problems involved are considered and 
much attention is given to the specific objections that 
have been urged against retirement legislation.] 
^'^a. *New Jersey Bureau of state research of the state 
chamber of commerce. Teachers' retirement systems 
in New Jersey, their fallacies and evolution. Re- 
port prepared by Paul Studensky, Supervisor of the 
pension staff. December, 19 18. 88 p. 
Contents: Evolution of the systems. Present condi- 
tion and practical remedies [Contains aslo chapters on 
the fundamental fallacies common to most of the retire- 
ment systems in this country and on the fundamental 
principles of a sound retirement system]. 

36b New Jersey pension and retirement fund commission. 
Preliminary report. State research. Consecutive no. 
9, 19 18. 20 p. [A brief analysis of the unsound fea- 
tures of the teachers' and other retirement systems in 
New Jersey. A discussion of the principles of sound 
pension financing.] 

36c * Reorganization of the New Jersey Teachers' Re- 
tirement Systems. State Research, Consecutive no. 13. 
1919. 28 p. 

Contents: Present systems and their reorganization — 
A critical and constructive study. Contents of pro- 
posed legislation — An act providing for the establish- 
ment of a new fund on an actuarial basis. Actuarial 
estimates — Cost of existing systems and of proposed 
plan. 

^y *'New York (City) Commission on pcmiom. Report on 
the teachers' retirement fund, city of New York. 
1915. [New York, The Trow press, 1916.] 177 p. 
[Letter of submittal and chapters II and VI contain 

' critical and constructive discussions of the principles 

of various pension provisions and questions of cost.] 

447 



Teachers' Pension Systems in the United States 

38 * Report on the pension funds of the city of New- 

York. Part I. Operation of the nine existing pension 
funds. [New York, J. J. Little and Ives co.] 1916. 
171 p. 

[Chapters II and IV contain criticism of benefits, prin- 
ciples to be considered in reorganization plan, and 
summary of conclusions.] 

38a * Report on the pension funds of the city of New 

York, Part III, 1918. 151 p. [Contains the pro- 
posed retirement plan covering all branches of munici- 
pal service, and a discussion of its underlying .r^^inci 
pals.] ^^' 

39 Patten, S. N. Are pensions for college teachers a form 

of socialism? Science, May 22, 1908, n.s. v. 27; 
822-4. 

40 Pensions and the learned professions. Science, Nov. 24, 

1911, V. 34; 715-17. 

[Criticizes the pension policy of the Carnegie founda- 
tion.] 

41 Peters, Michael. The mischief of pensions. Gentlemen's 

magazine (London) Aug., 1907, v. 303: 113-19. 
[Writer attacks pensions on the ground that they "in- 
flict certain moral injury on the character of the indi- 
vidual as well as a very practical injury on the 
business."] 

42 Pritchett, Henry S. Moral influence of a university 

pension system. Popular science monthly, Nov., 1911, 
V. 79: 502-13. 

42a The pension problem and its solution. Atlantic 

monthly. December, 1918. p. 737-43. (A brief dis- 
cussion of the principles underlying the new Carnegie 
pension plan. ) 

43 A pension system for public schools. Independent, 

March 20, 1913, v. 74: 617-21. 

[The director of the Carnegie foundation discusses the 
justification of teachers' pensions. Who ought to pay 
them ? What form of pension system would it be fair 
to adopt? What will a feasible pension system cost?] 

44 Ten years of college pensions. Independent, Sept. 

13, 1915, V. 83:361-3. 

45 Prosser, C. A. Teachers' annuities and retirement allow- 

448 



Appendices 

ances. Journal of education (Boston) Dec. 28, 191 1, 
V. 74; 683-84; Jan. 4, 1912, V. 75: 6-8. 
[Writer discusses the justification of teachers' annui- 
ties on the ground of heaUh risk, financial risk and 
inadequacy of wages; should the teachers contribute? 
How will they benefit ? Will their wages be depressed ? 
Should the public contribute? Should refunds be pro- 
vided? Against what risks of life should compulsory 
insurance be provided?] 

46 The teacher and old age. Boston, Houghton Mif- 
flin company, 191 3. 139 p. (Riverside educational 
monographs. ) 

[Chapters H, HI and IV contain a discussion of teach- 
ers' pensions in the light of social insurance principles; 
a part of the expense of the retirement allowance 
should be borne by the beneficiary; withdrawal equity; 
questions of cost; characteristics of a model retirement 
law] 

47 Reichenbach. The superannuation of teachers. Educa- 

tion, March, 1896, v. 16: 385-95. 

48 Shall teachers be pensioned? A symposium. Journal of 

education (Boston) April 2, 1891, v. 33: 211-14. 

49 *Sies, R. W. Teachers' pension systems in Great Britain. 

Washington, Govt, print, off., 1913. 88p. (U. S. 
Buieau of education. Bulletin 1913, no. 34) 
[Writer regards pensions as deferred pay, favors non- 
contributory pension systems, and direct relation of 
pension to salary, and considers accumulation of re- 
serve fund unnecessary. See p. 70-84] 

50 Smith, Anna Tolman. Teachers' salaries and pensions. 

Educational review, Nov., 1891, v. 2 : 335-46. 
[Urges the establishment of teachers' pension systems 
in the United States) : describes pension systems in va- 
rious countries] 

51 *Studensky, Paul. The pension problem and the philoso- 

phy of contributions. New York, 191 7. 16 p. May 
be obtained from the Bureau of Municipal Research, 
261 Broadway, New York City. 

[Shall the employer, the employee, or both, bear the 
cost of the system?] 

449 



Teachers' Pension Systems in the United States 

51a A sound municipal pension act and central 

supervision of all pension funds in New Jersey. 
'New Jersey' Vol. VI, no, i, October, 1918. 8 p. 
[An outline and discussion of the features of the bill 
proposed by the New Jersey pension and retirement 
fund commission.] ; also Legisl. Index 1919 nos. 8 and 
10. 

51b *Teachers' retirement systems in New Jersey, 

their fallacies and evolution (see under item 36a). 

51c Scientific reorganization of the New Jersey 

teachers' pension systems. Legislative index, 1919, 
nos. 2, 6 and 9. 

5 id New York City teachers' retirement fund. Na- 
tional municipal review, July, 1916, p. 520-22. 

52 Teachers' pensions. Gunton's magazine, June, 1898, v. 

14 •393-6. 

[Discusses purposes of pensions and argues against sal- 
ary deductions] 

53 Temple, Richard. Superannuation of elementary teach- 

ers. Fortnightly review, April, 1893, n.s. v. 53: 477- 
89. 

[Describes history of the English system; two-fold 
purposes of pensions; joint contributions; age and dis- 
ability; future charges] 

54 Tews, J. Ein soziales pensionssystem. Padagogische 

zeitung, June 12, 191 3, v. 42 : 455-6. 

[Writer argues that married teachers should receive 

pensions different in amount from the unmarried] 

55 Tupper, Frederick A. A retirement fund for teachers. 

Boston, New England publishing co., 1906. 54 p. 

56 Winship, A. E. Teachers' pensions and annuities. Jour- 

nal of education, Sept. 23, 1909, v. 70: 283-4. 
[Urges the establishment of pension systems ; discusses 
the thrift argument and the inadequacy of teachers' 
salary; public must help] 

General Descriptions of Pension Systems In The 
United States 

Note : for material on individual pension systems, see 
Appendix I. 

450 



Appendices 

57 Carnegie foundation for the advancement of teaching. 

Annual reports. 

[Articles on pensions] 

I, 1906. History of teachers' pensions, p. 31-38; Pen- 
sions for widows of professors, p. 50-51. 

Ill, 1908. Cost of maintaining a retirement allow- 
ance system in a college, p. 50-53. Administra- 
tion of the retiring allowance system in tax-sup- 
ported institutions, p. 64-73. 

V, 1910. The establishment of retiring allowance 
systems by Haverford College and Brown Uni- 
versity, p. 32-34. 

VII, 1912. Pension systems, p. 23-44. 

VIII, 1913. Supplementary pension systems main- 
tained by associated colleges; new pension sys- 
tems, p. 33-47. 

IX, 1914. Pensions for public school teachers; state 
and local systems, p. 21-44. 

X, 1 91 5. Pensions for pubhc school teachers; state 

systems, p. 49-63 ; pensions for university profes- 
sors, p. 63-65 ; tabular statement of teachers' pen- 
sion systems, p. 86-99; summary of teachers' pen- 
sion funds, p. 100-102. 

XI, 1916. Pensions for public school teachers, p. 
109-17. 

XII, 191 7. Pension systems, p. 87-100. 

58 Chicago. Board of trustees of the public school teachers' 

retirement fund. A synopsis of the pension laws of 
states and cities of the United States. Dec. 26, 1910. 
15 p. [Contains brief descriptions of pension sys- 
tems of three states and twenty cities; data now ob- 
solete.] 

59 Eliot, C. W. and others. The best means of introduc- 

ing the pension system into American universities. {In 
Association of American universities. Journal of pro- 
ceedings and addresses, 1906. p. 64-71.) 

60 Hamilton, W. I. Comparative table of state insurance 

systems for teachers in the United States. Journal 
of education, June 19, 1913, v. yy; 705; July 3, 1913, 
V. 78 : 20. 

451 



Teachers' Pension Systems in the United States 

6i Henderson, C. R. Pensions for public school teachers. 
American journal of sociology, May 1908, v. 13: 
846-54. 

[Brief description of several systems existing in United 
States in 1908.] 

62 Hood, William R. Teachers' pension laws in the United 

States. {In National education association of the 
United States. Committee on teachers' salaries and 
cost of living, 1913. Report. Ann. Arbor, 1913. 
p. 266-328.) 

63 Keyes, C. H. "Teachers' pensions." {In National edu- 

cation association of the United States. Journal of pro- 
ceedings and addresses, July, 1907. p. 103-108.) 

64 Massachusetts. Board of education. Pensions for 

teachers. {In its 70th annual report, 1905-1906. Bos- 
ton, 1907. p. 13-14 and 325-26.) 
[A description of pensions in Harvard university, Bos- 
ton, and Massachusetts; arguments in favor of pen- 
sions.] 

65 Special report on teachers' retirement allow- 
ances. [Boston] 191 3. 48 p. (House. Doc. 191 3, 
no. 1926.) 

[Comparative table of teachers' pension systems in the 
United States, p. 33-41.] 

66 Commission on pensions. Report, March 16, 19 14. 

Boston, 1914. 345 p. (House Doc. 1914, no. 2450.) 
[An investigation of all pension systems existing in 
Massachusetts and constructive recommendations; 
comparative tables describing pension systems for 
policemen, firemen, teachers and judges in the states 
and cities of the United States.] 

Gy National education association of the United States. Re- 
port of Committee on salaries, tenure and pensions of 
public school teachers in the United States. {In its 
Report, July, 1905. p. 177-84.) 
[Brief description of pension laws in force in 1905.] 

68 New Jersey. Alliance of women teachers. Public 
school teachers' retirement systems in the United 
States. September, 1918. no p. [A synopsis of re- 
tirement laws.] 

452 



Appendices 

69 Prosser, C. A. The teacher and old age. Boston, 

Houghton Mifflin company, 1913. 139 p. (Riverside 
educational monographs. ) 

[Chapter II and appendices contain a statement of the 
present extent of teachers' pensions and annuities in 
the United States; comparative table of state com- 
pulsory insurance systems for teachers in the United 
States.] 

70 Sies, R. W. and Elliott, E. C. Teachers' pensions. (In 

Cyclopedia of education, ed. by Paul Monroe. New 
York, 191 3. p. 635-40.) 

[Classification of the systems in the United States into 
private voluntary, quasi public, semi-public, public] 

71 Smith, A. Tolman. Teachers' salaries and pensions. 

Educational review, Nov., 1891, v. 2: 335-46. 
[Urges the establishment of teachers' pension systems 
in the United Statet^; describes the pension systems of 
several countries.] 

72 The teachers' retirement fund. Journal of education, 

Feb. 21, 1907, V. 65: 202-3. 

[A brief description of pension funds in Philadelphia 

and other cities.] 

73 U. S. Bureau of education. Annual reports. 

[Articles on pensions.] 

1895, V. I, p. 1079-1102. (Description of early 
mutual benefit associations in Boston and other 
places. Full text of laws and constitutions govern- 
ing pension funds of California, Chicago, Detroit, 
Philadelphia, New York.) 

1899, V. 2, p. 1478-81. (Extracts from Chicago and 
Cincinnati reports.) 

1902, V. 2, p. 2369-74. 

1903, V. 2, p. 2449-52. 

1904, V. 2, p. 2281-85. 

1906, V. I, p. 215-20. 

1907, V. I, p. 448-56. (Reports of Boston, New Jersey 
and Cincinnati funds.) 

1908, V. I, p. 104-105. (Brief description of 1908 
laws of Massachusetts and Virginia.) 

1909, V. I, p. 117-121. (Brief description of the 1909 
laws of Minnesota and Nebraska, the pension sys- 

453 



Teachers' Pension Systems in the United States 

terns of Harrisburg and Virginia, and the pension 
bill for the District of Columbia.) 

1911, V. I, p. 96-100. (Brief description of pension 
laws of 191 1, of New York, Ohio, Pennsylvania, 
Illinois and Kansas.) 

1912, V. I, p. 65-68, 151-52. (Brief description of 
pension systems of Arizona, Virginia, Maryland, 
New Jersey, New York; list of states having pension 
systems in 191 2.) 

1913, V. I, p. 913-916. (Brief description of new 
pension laws of Massachusetts, California, New 
Jersey and Maine. ) 

74 Bulletins of the Bureau of education. 

[Articles on teachers' pensions.] 

191 3, no. 55. Teachers' pensions, p. 137-54. (Con- 
tains a digest of pension laws in force in 1913.) 

191 5, no. 47. Teachers' pensions, p. 447-65. (Con- 
tains a digest of pension laws in force Jan. i, 1915; 
dates of laws not given.) 

1916, no. 14. State pension systems for public school 
teachers, prepared for the Committee on teachers' 
salaries, pensions and tenure of the National educa- 
tion association, by W. Carson Ryan, Jr. and Roberta 
King. 46 p. (Contains a comparative chart, ex- 
tracts from letters of secretaries of retirement funds, 
and texts of laws.) 

75 Teachers' pensions. (From Current Topics, Com- 
missioner of Education's report, 1905 and 1906.) 
Washington, Govt, print, off., 1910. 21 p. (60th 
Cong., 2d sess. Senate. Doc. no. 585. Serial no. 

5407-) 

76 Bureau of labor. Pension funds for municipal 

employees and railroad pension systems in the United 
States. Washington, Govt, print, off., 1910. 89 p. 
(6ist Cong., 2d sess. Senate Doc. 427. Serial 5658.) 
[Contains a comparative chart of teachers' pensions 
in the United States.] 



454 



INDEX 



Accrued liabilities, 104-106, 127. 

Actuarial tables, 431-440. 

Actuary, determination of cost of 
benefits by, 101-104. 

Administrative expense, contribution 
towards, 133. 

Age and salary, contributions gradu- 
ated according to, 150. 

Albany Teachers' Retirement Fund, 
laws, etc., 329. 

Allegheny County (Md.) Teachers' 
Retirement Fund, laws, etc., 319. 

Altoona (Pa.) Teachers' Retirement 
Fund, laws, etc., 338. 

Annuity associations, 6-12 ; failure of, 
13-15. 

Annuity benefits, requirements for, 
18. 

Arizona, State and local funds, 30. 

Arizona Teachers' Retirement Sys- 
tem, laws, etc., 309. 

Army and Navy, pensions in United 
States, 15. 

Atlanta Teachers' Retirement System, 
laws, etc., 312. 

Baltimore, sick benefit association, 
6; annuity association, 8, 13. 

Baltimore County Teachers' Retire- 
ment Fund, laws, etc., 320. 

Baltimore Teachers' Retirement 
Fund, eligibility to retirement, 60; 
pension determined by salary, 68; 
death benefit, 87 ; growth of pen- 
sion payments, 97 ; financing gov- 
ernment's contribution, 142; con- 
tributions graduated, 149; history 
of, 214-216; analyzed, 302; laws, 
etc., 319. 

Benefits, conditions under which 
granted, 41-47; amount of, 47; di- 
vision of cost of, 48-53 ; determin- 
ing cost of, 95-115; differences in 
cost of, 115-116. 

Boston, annuity association, 8, 13. 

Boston Mutual Benefit Association, 
eflfects of operation, 13. 

Boston Teachers' Permanent Fund, 
graduated pensions, 69; inadequacy 
of contributions, 113; division of 
cost of benefits, 123 ; financing 
government's contribution, 140 ; con- 
tribution uniform throughout, 145 ; 



history of, 212-214; analyzed, 302; 
laws, etc., 322. 

Boston Teachers' Retirement Fund, 
eligibility to retirement, 60; inade- 
quacy of contributions, 113; divi- 
sion of cost of benefits, 123; history 
of, 209-212; analyzed, 302; laws, 
etc., 321. 

Bristol (R. I.) Teachers' Retirement 
Fund, laws, etc., 341. 

British Civil Service, growth of pen- 
sion payments, 99; non-contribu- 
tory system, 120. 

Brooklyn, mutual aid association, 4; 
annuity association, 6, 8, 11, 13, 14; 
pension legislation, 15; retirement 
fund, 17; compulsory fund, 21; re- 
tirement fund contributions, 25. 

Bruere, Henry, comment on joint 
contributory system, 121. 

Buflfalo, sick benefit association, 6. 

Buffalo Teachers' Retirement Fund, 
17; compulsory fund, 20; eligibil- 
ity to retirement, 60; pension deter- 
mined by salary, 68; amount of dis- 
ability benefit, 81 ; financing govern- 
ment's contribution, 142; history of, 
216-218; analyzed, 303; laws, etc., 
330. 

California Teachers' Retirement Sal- 
ary Fund, eligibility to retirement, 
60 ; flat pension system, 66 ; disa- 
bility examinations, 85; inadequacy 
of contributions, 107; financing 
government's contribution, 138 ; 
contribution uniform throughout, 
145; management of system, 157; 
history of, 195-198; analyzed, 296; 
laws, etc., 309. 

Camden, mutual aid association, 4. 

Canton, fund under uniform Ohio 
law, 336. 

Cash disbursement fund, operation of 
system on, 100, 103. 

Cash disbursement method, 135. 

Charleston Teachers' Retirement 
Fund, established, 29; laws, etc., 
342. 

Chester (Pa.) Teachers' Retirement 
Fund, laws, etc., 338. 

Chicago, sick benefit association, 6. 

Chicago Teachers' Pension and Re- 



455 



Index 



tirement Fund, established, 17; 
compulsory fund, 20; retirement 
fund contributions, 24-25; retire- 
ment fund insolvency, 26; eligibil- 
ity to retirement, 60; flat pension 
system, 66; disability examinations, 
85 ; inadequacy of contributions, 
107; financing government's contri- 
bution, 141 ; contributions gradu- 
ated, 147 ; compulsory participa- 
tion, 156; history of, 220-233; ana- 
lyzed, 303; laws, etc., 314. 

Cincinnati, annuity association, 8; 
retirement fund, 17; compulsory 
fund, 20; retirement fund contri- 
butions, 23; fund under uniform 
Ohio law, 336. 

Civil Service of Austria, growth of 
pension payments, 100. 

Cleveland Teachers' Pension Fund, 
eligibility to retirement, 60; length 
of service pension, 67; death bene- 
fit, 87; inadequacy of contributions, 
107; financing government's contri- 
bution, 138, 140; contribution uni- 
form throughout, 145; history of, 
207-209; analyzed, 304; laws, etc., 
336. 

Cogswell, E. S., statement regarding 
financial condition of Minnesota 
fund, 192. 

Cohoes (N. Y.) Teachers' Retire- 
ment Fund, laws, etc., 330. 

Columbus (Ga.) Teachers' Retire- 
ment System, laws etc., 312. 

Combined benefit, 70-72. 

Compulsory funds, 20. 

Compulsory participation, 154-157. 

Compulsory retirement, 63. 

Connecticut, annuity association, 8. 

Connecticut Teachers' Retirement 
Fund, established, 30; benefits 
granted, 41 ; eligibility to retire- 
ment, 60; compulsory retirement, 
63 ; combined benefit, 70 ; death 
benefit, 87 ; scientifically construct- 
ed system, 108-109; liquidating ac- 
crued liabilities in, 128, 131 ; rate of 
government contribution, 130; new 
entrants' benefits, 133 ; rate of in- 
terest guarantee, 134; contributions 
graduated, 148 ; history of, 239-242 ; 
analyzed, 296; laws, etc., 311; laws 
providing for sound pension sys- 
tem, 386-392. 

Contributions, of members of sys- 
tem, 53; inadequacy of, 107-113; 



graduated, 145-151 ; distribution of, 
over period of service, 151 ; mini- 
mum, 171. 

Dayton, fund under uniform Ohio 
law, 336. 

Death benefits, early, 4, 41, 44, 
86-90. 

Denver Teachers' Retirement Fund, 
eligibility to retirement, 60 ; length 
of service pension, 67; inadequacy 
of contributions, 107; non-contrib- 
utory system, 123-124; financing 
government's contribution, I40n; 
management of system, 157; history 
of, 219; analyzed, 304; laws, etc., 
310. 

Des Moines, sick benefit association, 
6. 

Detroit, sick benefit association, 6. 

Detroit Teachers' Retirement Fund, 
established, 17; compulsory fund, 
20; laws, etc., 323. 

Disability benefit, 40, 43, 78-85. 

Dismissal, benefits at, 90. 

District of Columbia, laws, etc., 312. 

Division of cost, between government 
and teachers, 1 17-124. 

Duluth Teachers' Retirement Fund 
Association, laws, etc., 324. 

Elmira (N. Y.) Teachers' Pension 
Fund, laws, etc., 330. 

Erie Teachers' Retirement System, 
established, 30; laws, etc., 338. 

Evansville, sick benefit association, 6. 

Federation of Teachers' Associations, 
New York City, views on compul- 
sory participation, 155. 

Firemen, pensions in U. S., 15. 

"Flat" pension systems, 65. 

Governmental contributions, 23-26. 

Government's contribution, 125-142. 

Great Britain, pension cost, 59. 

Greene County (N. Y.) Teachers' Re- 
tirement Fund, laws, etc., 330. 

Harrisburg (Pa.) Teachers' Retire- 
ment Fund, laws, etc., 339. 

Hoboken, sick benefit association, 6. 

Illinois Teachers' Pension and Re- 
tirement Fund, eligibility to retire- 
ment, 60; flat pension system, 66; 
disability examinations, 85 ; inad- 
equacy of contributions, 107; 
financing government's contribu- 
tion, 140 n; contributions gradu- 



456 



Index 



ated, 147 ; compulsory participation, 

156; history of, 176-179; analyzed, 

297; laws, etc., 313. 
Indiana, State and local funds, 32. 
Indiana State Teachers' Retirement 

Fund, laws, etc., 315. 
Indianapolis Teachers' Pension Fund, 

laws, etc., 316. 
Iowa, proposed system, 317. 
Jersey City, mutual aid association, 4. 
Jessup, W. A., report on financial 

condition of Cleveland fund, 208. 
Joint or partly contributory system, 

120-122. 

Lancaster (Pa.) Teachers' Retirement 
Fund Association, laws, etc., 339. 

Laws, references to, 307-345 ; provid- 
ing for sound pension systems in 
Massachusetts, 346-354; in New 
York City, 355-373; in Pennsyl- 
vania, 374-385 ; in Connecticut, 
386-302; in New Jersey, 393-409; 
in Ohio, 410-424; in Vermont, 425- 
430. 

Length of service, pension deter- 
mined by, 66; contribution gradu- 
ated according to, 165. 

Length of service and salary, pension 
determined by, 69-70. 

Liabilities, of a going system, 113- 
115; under different benefits, 115- 
116. 

Life insurance, in early associations, 
5. 

Lincoln, sick benefit association, 6. 

Liverpool, liquidating accrued liabili- 
ties, 129, 131. 

Local funds, 31. 

London, liquidating accrued liabili- 
ties in, 128. 

London Metropolitan Police Pension 
Fund, growth of pension payments, 
99- 

Louisville Teachers' Insurance and 
Annuity Fund, laws, etc., 317. 

Maine School Pension Fund, super- 
annuation benefit, 40; eligibility to 
retirement, 60; length of service 
pension, d"] ; disability benefit dis- 
regarded, 79; growth of pension 
payments, 97 ; non-contributory 
system, 123-124; financing govern- 
ment's contribution, 142 ; manage- 
ment of system, 157; history of, 
'^Ti, 174; analyzed, 297; laws, etc., 
318. 



Management of systems, 55, 157-161. 

Maryland Retirement System, laws, 
etc., 319- 

Massachusetts, annuity association, 8. 

Massachusetts Teachers' Retirement 
System, State and local funds, 2>Z \ 
benefits granted, 41 ; eligibility to 
retirement, 59 ; compulsory retire- 
ment, 63; combined benefit, 70; dis- 
ability examinations, 85 ; death ben- 
efit, 87 ; scientifically constructed 
system, 108-112; joint contributory 
system, 124; liquidating accrued lia- 
bilities in, 128, 131 ; rate of govern- 
ment's contribution, 130; new en- 
trants' benefits, 133 ; rate of inter- 
est guarantee, 134; contributions 
graduated, 148; compulsory par- 
ticipation, 156; management of sys- 
tem, 158; actuarial estimate of lia- 
bilities, 165; history of, 234-239; 
analyzed, 297; laws, etc., 320; 
laws providing for sound pension 
system, 346-354- 

Maximum pension, provisions for, 
72-76. 

Medical examinations, 82-85. 

Michigan Teachers' Retirement Fund, 
eligibilty to retirement, 60; gradu- 
ated pensions, 69; wholly contribu- 
tory system, 123-124; contributions 
graduated, 149; history of, 200-202; 
analyzed, 298; laws, etc., z^Z- 

Milwaukee Teachers' Retirement 
Fund, laws, etc., 345. 

Minimum pension, provisions for, 
72-74. 

Minneapolis Teachers' Retirem.ent 
Fund Association, laws, etc., 324. 

Minnesota Teachers' Insurance and 
Retirement Fund, eligibility to re- 
tirement, 60; length of service pen- 
sion, 66 ; disability examinations, 
85; death benefit, 87; growth of 
pension payments, 97 ; inadequacy 
of contributions, 107; financing 
government's contribution, I40n 
contributions graduated, 147; his 
tory of, 190-192; analyzed, 298 
laws, etc., 323. 

Montana Public School Teachers' Re- 
tirement Salary Fund, laws, etc., 
325. 

Mt. Vernon (N. Y.) Teachers' Retire- 
ment Fund, laws, etc., 330. 

Mutual aid associations, early, 4-15. 



457 



Index 



Nassau County (N. Y.) Teachers 
Retirement Fund, laws, etc., 331. 

National Civil Service of France, 
growth of pension payments, 99. 

Nevada Teachers' Retirement Salary 
Fund, laws, etc., 326. 

New Bedford, sick benefit associ- 
ation, 6. 

New entrants' benefits, contribution 
towards, 132. 

New Hampshire Teachers' Retirement 
System, laws, etc., 326. 

New Haven Teachers' Pension Fund, 
laws, etc., 311. 

New Jersey, reorganization of retire- 
rnent systems, 274-281 ; laws pro- 
viding for sound pension systems, 
393-409. 

New Jersey Teachers' Retirement 
Fund, pension legislation, 15; es- 
tablishment of fund, 17; pension 
extension, 38; proof of incapacity, 
57; pension determined by salary, 
68; disability benefit, 81; disability 
examinations, 85; division of cost 
of benefits, 123 ; contributions grad- 
uated, 146; history of, 183-190; 
analyzed, 299; laws, etc., 319. 

New Jersey 35-Year Service Pension 
System, superannuation benefit, 40; 
eligibility to retirement, 60; pen- 
sion determined by salary, 68; divi- 
sion of cost of benefits, 123 ; cash 
disbursement method, 136 ; manage- 
ment of system, 157; history of, 
169-173; analyzed, 299; laws, etc., 
326. 

New London Teachers' Pension 
Fund, laws, etc., 311. 

New Orleans Teachers' Retirement 
Fund, eligibility to retirement, 60; 
pension determined by salary, 68 ; 
disability examinations, 85 ; death 
benefit, 87; wholly contributory 
system, 123-124; contributions 
graduated, 149; history of, 218-219; 
analyzed, 304; laws, etc., 318. 

Newport (R. I.) Teachers' Retire- 
ment Fund, established, 29; laws, 
etc., 341. 
New York City, annunity association, 
6. 13, 14. 

New York City Teachers' Retirement 
Fund, pension legislation, 15; es- 
tablished, 17 ; compulsory fund, 21 ; 
retirement fund contributions, 24, 
25; unsoundness of fund, 27; fund 



on actuarial basis, 33 ; pension ex- 
tension, 38; benefits granted, 41; 
eligibility to retirement, 60; com- 
pulsory retirement, 63 ; combined 
benefit, 72 ; disability examinations, 
85; death benefit, 87; growth of 
pension payments in old fund, 97; 
scientifically constructed system, 
108-109; inadequacy of contribu- 
tions in old fund, 113; liquidating 
accrued liabilities in, 128, 131 ; sub- 
sequent service pension liabilities, 
129; rate of government contribu- 
tion, 130; new entrants' benefits, 
133 ; rate of interest guarantee, 
134; coordinating elements of con- 
tribution, 135 ; financing govern- 
ment's contribution, 138; contribu- 
tions graduated, 150; compulsory 
participation, 157; actuarial esti- 
mate of liabilities, 165 ; history of, 
243-264; analyzed, 305; laws, etc., 
331 ; laws providing for sound pen- 
sion system, 355-373- 

New York City Teachers' Mutual 
Life Assurance Association, estab- 
lishment of, 4. 

New York Commission on Pensions, 
investigation of mortality among 
teachers, 96. 

New York Teachers' Retirement 
Fund, established, 30; eligibility to 
retirement, 60; pension determined 
by salary, 68; financing govern- 
ment's contribution, 138; contribu- 
tions graduated, 146; history of, 
179-182; analyzed, 299; laws, etc., 
329. 

Non-contributory system, 119. 

North Dakota Teachers' Insurance 
and Retirement Fund, laws, etc., 
334- 

Norwood, fund under uniform Ohio 
law, 337- 

Ohio, establishment of retirement 
system, 282-286; laws providing for 
sound pension system, 410-424; 
uniform laws governing cities, 335. 

Omaha, annuity association, 8. 

Omaha Teachers' Retirement Fund 
Association, laws, etc., 325. 

Outside service, credit for, 58. 

Paris Police Pension Fund, growth of 
pension {payments, 99. 

Participation, compulsory vs. volun- 
tary, 54. 

458 



Index 



Paterson. sick benefit association, 6. 

Pennsylvania Public School Teach- 
ers' and Employees' Retirement 
System, established, 30; State and 
local funds, 33 ; pension extension, 
39 ; benefits granted, 41 ; eligibility 
to retirement, 59; compulsory re- 
tirement, 63 ; combined benefit, 72 ; 
disability examinations, 85 ; death 
benefit, 87 ; scientifically constructed 
system, 108-109; liquidating ac- 
crued liabilities, 129, 131 ; rate of 
government contribution, 131 ; new 
entrants' benefits, 133; coordinating 
elements of contribution, 135; con- 
tributions graduated, 150; compul- 
sory participation, 157; actuarial 
estimate of liabilities, 165 ; history 
of, 265-273 ; analyzed, 300 ; laws 
etc., 338; laws providing for sound 
pension system, 374-385- 

Pension, meaning of term, 3n. 

Pension legislation, unsound, 15-23. 

Pension payments, growth of, 95-100. 

Pension systems, pioneer, 17; actu- 
arial process in investigation of, 
27n ; present extent of, 29 ; outlined, 
35-56; credit for outside service 
in, 58. 

Peoria Teachers' Pension and Retire- 
ment Fund, laws, etc., 315. 

Philadelphia, annuity association, 8, 
13- 

Philadelphia Teachers' Retirement 
Fund, reorganization of, 33 ; eligi- 
bility to retirement, 60 ; pension de- 
termined by salary, 68; disability 
examinations, 85 ; financing govern- 
ment's contribution, 142; contribu- 
tions graduated, 149; history of, 
203-207; analyzed, 306; laws, etc., 
339. 

Pittsburgh Teachers' Retirement As- 
sociation, superannuation benefit, 
40; eligibility to retirement, 60; 
fiat pension system, 66; disability 
benefit disregarded, 79; non-con- 
tributory system, 123-124; financ- 
ing government's contribution, 
142; management of system, 157; 
history of, 166-169; analyzed, 306; 
laws, etc., 340. 

Policemen, pensions in U. S., 15. 

Portland (Ore.) Teachers' Retirement 
Fund Association, laws, etc., 337. 

Premature retirement, danger of, 61. 



Prior service pensions, contributions 
for, 126-129. 

Providence (R. I.) Teachers' Retire- 
ment Fund, laws, etc., 341. 

Rate of interest, contribution toward 
guarantee of, 134. 

Reading (Pa.) Teachers' Retirement 
Fund, laws, etc., 340. 

Reserve fund, operation of system 
on, 100-103. 

Reserves, systems without, 165-174; 
inadequate, in States, 175-202; in- 
adequate in local systems, 203-219. 

Resignation, benefits at, 90. 

Retirement benefit, eligibility to, in 
State funds, 60; eligibility to, in 
city funds, 60. 

Retirement pensions, three periods in 
movement for, 3. 

Rhode Island Teachers' Pension Sys- 
tem, division of cost of benefits, 
123; laws, etc., 340. 

Rochester, N. Y., sick benefit associ- 
ation, 6. 

Rochester (N. Y.) Teachers' Retire- 
ment Fund, laws, etc., 333. 

S^ Touis, retirement fund, 17. 

St. Paul, sick benefit asso^'-^.t-O'^, ^. 

St. Paul Teachers' Retirement Fund 
Association, laws, etc., 324. 

Salary, pension determined by, 67 ; 
contribution graduated according to, 
145- 

Salary and length of service, contri- 
bution graduated according to, 146. 

Salt Lake City Teachers' Retirement 
Fund, laws, etc., 343. 

San Francisco Retirement Fund, es- 
tablished, 17; laws, etc., 310. 

Saratoga County (N. Y.) Teachers' 
Retirement Fund, laws, etc., 333. 

Savannah, sick benefit association, 6. 

"Savings or thrift" systems, 65. 

Schenectady Teachers' Retirement 
Fund, laws, etc., 333. 

Scotland, liquidating accrued liabili- 
ties in, 128. 

Scranton, Pa., sick benefit associ- 
ation, 6. 

Scranton (Pa.) Teachers' Retirement 
Fund, laws, etc., 340. 

Sick benefit associations, 5. 

Solvency of system, guarantee of, 
134- 

South Bend (Ind.) Teachers' Retire- 
ment Fund, laws, etc., 316. 



459 



Index 



Springfield, fund under uniform Ohio 
law, 337. 

State-wide funds, growth of, 30-34 

Statistical reports, preferences to 
307-345- 

Subsequent service pensions, contri- 
butions for, 129-132. 

Superannuation benefit, 40, 42; eli- 
gibility for, 57; conditions for, 62; 
amount of, 63-72. 

Swarthmore, sick benefit association, 
6. 

Syracuse Teachers Retirement Fund, 
laws, etc., 333. 

Teachers' contributions, 143-153. 
Teachers' pensions, evolution of, in 

United States, 3-34. 
Terre Haute Teachers' Retirement 

Fund, laws, etc., 317. 
Toledo, fund under uniform Ohio 

law, 337. 
Tontine, forfeiture principle abroad 

known as, 12, 90, 91. 
Trenton, sick benefit association, 6. 
Troy Teachers Pension Fund, laws, 

etc., 334. 

Utah Teachers' ,Re'..rreiu^;nL Itund, 
laws, etc., 342. 

Vermont, establishment of new re- 
tirement system, 287-294; laws pro- 
viding for sound pension system, 
425-430. 

Vermont Teachers Retirement Fund 
Association, laws, etc., 343. 



Virginia Retired Teachers' Fund, eli- 
gibility to retirement, 60; pension 
determined by salary, 68; disability 
benefit, 81 ; inadequacy of contri- 
butions in, 113; financing govern- 
ment's contribution, 142; contribu- 
tions graduated, 146; management 
of system, 157; history of, 198-200; 
analyzed, 301 ; laws, etc., 343. 

Voluntary funds, 19. 

Washington, proposed system, 344. 

Washington, D. C, annuity associ- 
ation, 8, 13. 

Watervliet (N. Y.) Teachers' Retire- 
ment Fund, laws, etc., 334. 

Westchester County (N. Y.) Teach- 
ers' Retirement Fund, laws, etc., 
334- 

Wholly contributory system, 118. 

Wilkes-Barre Teachers' Retirement 
Fund, laws, etc., 340. 

Wilmington Teachers' Retirement 
Fund, laws, etc., 311. 

Wisconsin Teachers' Insurance and 
Retirement Fund, established, 30; 
eligibility to retirement, 60; length 
of service pension, 66; inadequacy 
of contributions, 107; financing 
government's contribution, 141 ; 
contributions graduated, 149; com- 
pulsory participation, 156; history 
of, 193-195 ; analyzed, 301 ; laws, 
etc., 344. 

Withdrawal benefits, 45, 90-94. 

Yonkers Teachers' Retirement Fund, 
laws, etc., 334. 



460 



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